Stocks closed lower Tuesday as U.S. oil settled below $40 for the first time since April and as the Dow closed lower for the seventh straight day.
"Given the flow of news we've had over the past few days, we're seeing a realization that we're at high levels," said Bruce McCain, chief investment strategist at Key Private Bank. "Most of the indicators are mixed enough ... that investors have decided to pull back."
U.S. crude settled 1.37 percent lower, near at $39.51 per barrel, erasing earlier gains amid oversupply concerns. On Monday, WTI fell more than 3 percent to record its worst settlement since April 20.
"Overall, it's worries about global growth and that's been combined with oil prices," said Kate Warne, investment strategist at Edward Jones.
The Dow Jones industrial average closed about 90 points lower after falling more than 150, recording its first seven-day losing streak since August of last year. Boeing and Goldman Sachs contributed the most losses within the Dow.
The benchmark S&P 500 ended about 0.6 percent lower, as consumer discretionary lagged. "They took out yesterday's low and they broke down below 2,160 and I think its feeding on itself," said Art Cashin, director of floor operations at UBS. The 2,160 level on the S&P is the top of a key support area.
The Nasdaq composite underperformed, falling about 1 percent. The index also snapped a five-day winning streak.
"I think we're seeing a shift in sentiment where investors are taking the path of least resistance to pressure stocks," said Mark Luschini, chief investment strategist at Janney Montgomery Scott, adding the market is also taking a breather from its recent rally.
"If it's a short, orderly pullback, then this is a healthy pullback," said Adam Sarhan, CEO of Sarhan Capital.
Peter Cardillo, chief market economist at First Standard Financial, said "I think it's just us following global markets" lower.
Overnight, Japan's Nikkei 225 fell 1.47 percent as investors awaited for a hefty fiscal stimulus plan announced last week. That said, the government's $132.04 billion plan was not enough to calm investors, as the yen soared to a three-week high versus the dollar, according to Reuters. The traditional safe-haven currency was last up 1.5 percent versus the dollar, near 100.8.
"I think I heard it was their 24th over the past 25 years. I believe this is the 5th since Abe took office," Peter Boockvar, chief market analyst at The Lindsey Group, said in a Tuesday note to clients.
"I'll say again, if [negative interest-rate policy] is now being repudiated as a good idea (thank heavens if it is) and limits are being realized in the amount of government bonds that can be purchased, was the blow off rally in global sovereign bonds post UK vote the end for now in the global bond market rally? I believe it is very likely. Yields are jumping throughout Europe and in US Treasuries as well," Boockvar said.
U.S. Treasuries traded mixed Tuesday afternoon, with the two-year note yield near 0.67 percent and the benchmark 10-year yield holding near 1.54 percent.
European stocks fell, with the pan-European Stoxx 600 index closed more than 1 percent as concerns over the region's banks weighed. The Stoxx Banks index fell more than 3 percent lower.
Deutsche and Credit Suisse's U.S.-listed shares closed down 3.75 percent and 4.67 percent, respectively.
On the economic data front, personal income rose 0.2 percent in June, just below expectations, while personal consumer spending for the same month advanced 0.4 percent, beating estimates. July auto sales data were also released throughout the day.
"That leads to worries about whether the consumer is going to keep spending," Edward Jones' Warne said.
Investors will digest the latest employment statistics on Friday, when the Bureau of Labor Statistics releases the July nonfarm payrolls report.
Sarhan, CEO of Sarhan Capital, said the Federal Reserve may try to indicate the possibility of a rate hike "with its rhetoric" if the number of jobs created is much higher than expected, but "I don't think they raise rates in September."
Mike Bailey, director of research at FBB Capital Partners said that, even with a strong jobs number, "the poor GDP number is going to pour could water on that."
Meanwhile, earnings season continued Tuesday, as Dow component Pfizer posted quarterly results. "We've had a pretty good earnings period so far," said J.J. Kinahan, chief strategist at TD Ameritrade. "We'll see if that continues."
The Dow Jones industrial average closed 90.74 points lower, or 0.49 percent, at 18,313.77, with Pfizer leading decliners and ExxonMobil the top advancer.
The ended 0.64 percent lower, or 13.81 points, at 2,157.03, with consumer discretionary leading nine sectors lower and energy the only riser.
The Nasdaq closed 46.46 points lower, or 0.9 percent, at 5,137.73.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded 8.1 percent higher, near 13.5.
About four stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 930 million and a composite volume of 3.781 billion at the close.
Gold futures for December delivery settled $13 higher at $1,372.60 per ounce.
On tap this week:
*Planner subject to change.
Earnings: AIG, Electronic Arts, Newfield Exploration, Solar Capital, Etsy, Fitbit, Steve Madden, Tableau Software, La Quinta
July vehicle sales
Earnings: Time Warner, Tesla Motors, Allstate, Agrium, Continental Resources, Virtu Financial, Clorox, Transocean, Marathon Oil, Kate Spade, Iamgold, Occidental Petroleum, Herbalife, Tesoro, Delphi Automotive, MetLife, 3D Systems, Sunoco Logistics, Noble Energy, Humana, HollyFrontier
8:15 a.m. ADP employment
9:45 a.m. Services PMI
Earnings: Kraft Heinz, LinkedIn, Toyota, Siemens, Regeneron, Church & Dwight, Alcatel-Lucent, Apache, SeaWorld, Time Inc, Motorola Solutions, Priceline, Symantec, Activision Blizzard, FireEye, Zillow, Weight Watchers, Lionsgate, El Pollo Loco, Zynga
8:30 a.m. Initial claims
10 a.m. Factory orders
Earnings: Weyerhaeuser, Allianz, Virgin America, Buckeye Partners, Liberty Interactive
8:30 a.m. Employment report; international trade
3 p.m. Consumer credit