Stocks slide as oil’s slump hits energy stocks

Stocks edged mostly lower on Tuesday, led by a drop in energy stocks as oil continued to fall. Investors were also disappointed by the earnings outlooks from companies including Priceline and Michael Kors.

Keeping score: The Standard & Poor’s 500 index fell 12 points, or 0.6 percent, to 2,005 as of 12:11 p.m. Eastern time. The Dow Jones industrial average fell 15 points, or 0.1 percent, to 17,350 points. The Nasdaq composite dropped 36 points, or 0.8 percent, to 4,602.

Oil losers: Energy stocks in the S&P 500 index dropped 2.4 percent, extending their losses for the year to 5.6 percent as oil prices fell. U.S. benchmark crude slumped $2.33, or almost 3 percent, to $76.45 a barrel, the lowest price since October 2011. Brent crude, the international benchmark, fell $2.34, or 2.8 percent, to $82.43 a barrel.

Oil has fallen sharply in recent weeks as global supplies rise while demand for fuel trails earlier expectations. The latest move down in the price was prompted

Oil winners: The slumping price of oil is giving a boost to airlines, because the cost of fuel is their single largest operating costs. Delta Airlines surged $1.56, or 3.8 percent, to $42.15. United Continental, Jet Blue and Southwest Airlines also logged big gains.

Consumer boost: While slumping oil prices are hitting stocks hard, they should benefit the economy in the longer run as lower gas prices filter through to consumers, said Ernie Cecilia, Chief Investment Officer of Bryn Mawr Trust. The consumer should also benefit as interest rates continue to remain low, even after the Federal Reserve has stopped buying bonds as part of its economic stimulus measures.

“When oil spikes, all you hear about is that it’s a tax on the consumer, so conversely, it’s a windfall of sorts for the consumer, so it’s a plus,” said Cecelia.

Europe’s day: The European Union cut its already low economic growth forecasts further on Tuesday, indicating the recovery will remain sluggish amid problems for the biggest economies, particularly France and Germany. The official forecast for growth this year in the 18-country eurozone was cut to 0.8 percent from a prediction of 1.2 percent made in the spring. The institution also cut its forecast for next year.

Germany’s DAX dropped 0.9 percent to 9,169 while France’s CAC-40 fell 1.5 percent to 4,129. The FTSE 100 of leading British shares fell 0.5 percent to 6,453.

Supplement slump: Herbalife shares sank in after the company reported disappointing third-quarter results and a weak outlook late Tuesday. The seller of supplements and weight-loss products reported a profit of $11.2 million, or 13 cents per share, for the most recent quarter. That’s down 92 percent from the $142 million, or $1.32 per share, earned last year. The company’s stock slumped $9.63, or 17.2 percent, to $46.25.

Election Day: Investors will also be keeping an eye on the outcome of the midterm elections. Polling across the board gives Republicans well over a 50 percent chance of turning out at least six incumbent Senate Democrats or capturing seats left vacant by Democrat retirements, an outcome that would put the opposition in charge of both houses of Congress in the final two years of Obama’s second White House term.