Stocks tank as oil advance loses its footing

Last Updated Jan 13, 2016 4:10 PM EST

U.S. stocks tumbled hard on Wednesday as the price of crude oil fell on news that weekly supply data had recorded oil inventories at record highs. Shares of companies that rely on consumer discretionary spending led the day's losses.

Oil has finished lower for seven consecutive sessions, with the U.S. benchmark falling below $30 a barrel Tuesday for the first time since 2003. It settled Wednesday's session at $30.48.

U.S. commercial supplies of crude and refined products including gasoline increased by 10 million barrels last week to 1.3 billion barrels, according to the U.S. Energy Information Administration.

"The market started out on the plus side and then we got that inventory report and we've been down ever since," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research. "Until the supply drops, I don't see any reason why oil couldn't dip back down into the 20s."

Home Depot (HD) led the declines among blue-chip companies, with shares down nearly 5 percent to around $121. The Dow Jones industrials average (DJI) lost 365 points, or 2.2 percent, and finished the day at 16,151. The S&P 500 (SPX) fell 48 points, or 2.5 percent, to 1,890. The Nasdaq Composite (COMP) shed 160 points, or 3.4 percent, to 4,526.

Wall Street saw little reaction to the release on Wednesday of the Federal Reserve's Beige Book, a survey which found the U.S. economy expanded across most of the nation over the past six weeks even as a robust jobs market failed to translate into higher wages.

The Fed says in its latest snapshot of the economy that nine of its 12 regional banks reported modest or moderate growth in the latest period, according to the Associated Press.

The New York and Kansas City Fed banks reported that economic activity was "essentially flat."

Growth in consumer spending, which accounts for about 70 percent of U.S. economic activity, was "slight to moderate" in most districts.

Most manufacturing industries -- except for automakers and aircraft manufacturers -- "displayed a weakening in activity." Factories have been hurt by a stronger dollar, which makes American-made products more expensive in foreign markets.