Indexes lower as materials, energy drag

January 25, 2016 09:31 AM

U.S. stock indexes were lower on Monday morning, led by materials and energy stocks, after last week's rally in oil prices fizzled out.  

Crude prices resumed their slide, after a strong two-day run, as a record output from Iraq flooded a heavily oversupplied market. 

U.S. stocks logged their first week of gains in the year last week, with the three indexes closing up 2% on Friday.

All eyes will be on the U.S. Federal Reserve's next move on interest rates when the Federal Open Market Committee meets on Jan. 26-27.

Investors, already rattled by the volatile start to the year and a steep fall in oil prices, are also awaiting U.S. GDP data on Friday for a reading on the health of the economy.

"So right now, we're in wait-and-see mode as the market pauses to digest last week's very strong gains," said Adam Sarhan, chief executive of Sarhan Capital in New York.

Corporate results are not likely to improve sentiment, with quarterly profits at S&P 500 companies expected to fall 4.3%, according to Thomson Reuters data. Excluding energy companies, earnings are estimated to grow by 1.7%.

At 9:37 a.m. ET, the Dow Jones industrial average was down 82.69 points, or 0.51%, at 16,010.82, the S&P 500  was down 10.09 points, or 0.53%, at 1,896.81 and the Nasdaq Composite index was down 19.26 points, or 0.42%, at 4,571.92.

All 10 major S&P sectors were lower, led by the 1.93% fall in the materials sector.

International Paper was down 7.3% at $33.80 after Citigroup and Jefferies cut their ratings. The stock weighed the most on the materials sector.

Exxon  and Chevron were off 1.6%.

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Abhiram Nandakumar, Reuters