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US: Stocks pare steep losses; Dow drops 1.6%


[NEW YORK] Wall Street stocks tumbled Wednesday as US oil prices sank to fresh 12-year lows, but an afternoon rally significantly cut the session's losses.

The Dow Jones Industrial Average lost 249.28 points (1.56 per cent) at 15,766.74.

The broad-based S&P 500 fell 22.00 (1.17 per cent) to 1,859.33, while the tech-rich Nasdaq Composite Index dipped 5.26 (0.12 per cent) to 4,471.69.

US markets were seized much of the day with a selling frenzy following deep losses in overseas equity markets and another plunge in oil prices.

But the market shifted in mid-afternoon, briefly taking the Nasdaq into positive territory and sharply cutting losses for the Dow and S&P 500. At its low point, the Dow was down to 15,450.56, a fall of about 3.5 per cent.

"Sellers have been controlling the markets for the last two weeks. As soon as there was some real buying interest coming in, sellers disappeared," said Michael James, managing director of equity trading at Wedbush Securities.

"When emotion controls the direction of the market, you have the potential for significant swings like you had today," he said.

Wednesday's trade took the S&P 500's losses for the year to about 9.0 per cent on worries about slowing global growth.

"Today may have been capitulation day," said Peter Cardillo, chief market economist at First Standard Financial. "The market is beginning to gain ground here, and it's safe to say we may have a short-term bottom." Petroleum-linked stocks fell, with Chevron losing 3.1 per cent and oil-services companies Weatherford International and Nabors Industries shedding 6.3 per cent and 5.8 per cent, respectively.

Banks were another weak sector, likely reflecting expectations that the US Federal Reserve will hold off on raising interest rates again anytime soom. Bank of America fell 3.9 per cent, JPMorgan Chase 2.6 per cent and Citigroup 3.5 per cent.

Biotech stocks outperformed the market with Celgene gaining 4.4 per cent, Amgen 2.5 per cent and Gilead Sciences 0.7 per cent.

The biggest loser in the Dow was IBM, which tumbled 4.9 per cent after reporting its 15th straight quarter of declining revenues and offering a muted forecast on 2016 earnings.