Wall Street hit by oil price slide

NYSE traders Image copyright Reuters

(Close): Shares on Wall Street have closed lower, as further falls in the oil price dragged down energy stocks.

The Dow Jones fell 208 points, or 1.3%, at 15885.22, while the S&P 500 and the Nasdaq indexes both lost 1.6% to 1906.90 and 4,518.49 respectively.

Oil prices slid more than 6% as persistent concerns of oversupply were exacerbated by news that Iraq's output reached a record high last month.

The sharp falls wiped out most of the gains from a short lived rally.

All three main Wall Street indexes rose on Thursday and Friday, marking their first gains so far for the year.

Wedbush Securities managing director of equity trading Michael James said the market volatility was directly linked to the fluctuations in the oil price.

"Better oil markets Thursday and Friday led to better equity markets. A $2 retracement in oil today, it's not surprising to see a retracement in the equity indices," he said.

Oil companies were the biggest losers, with Exxon and Chevron both closing over 3% lower, while ConocoPhillips dropped 9.2%.

Johnson Controls, which makes ventilation systems and car batteries, sank 3.9% after it announced a deal to merge with Ireland-based Tyco International.

The so called tax inversion deal would allow Johnson Controls to avoid relatively high US corporate tax rates by moving its headquarters to Tyco's base in Ireland's Cork.