Wall Street down sharply on oil drop, global growth worries

By Yashaswini Swamynathan

REUTERS - A sharp drop in oil prices and global growth worries sent jitters through Wall Street, leading the three major U.S. indexes lower for the second straight day in volatile trading on Friday.

After three days of gains, losses in the past two sessions have pushed the Nasdaq into the red for the week, while the S&P 500 and the Dow are roughly flat.

Oil prices fell 2.5 percent as traders booked profits after a rally earlier this week pushed prices to their highest in 2016, and as the dollar regained lost ground. [O/R]

Financial stocks came under pressure again as global issues, including uncertainty over interest rate hikes and the impending vote on Britain's membership in the European Union, sent investors flocking to safe haven assets.

The yield on government bonds fell globally, to record lows in some cases. Gold, another safe haven, hit a fresh three-week high.

"The U.S. indexes are trailing what is happening overseas this morning. We've seen a decline in crude prices and strength in U.S. treasuries and that combination adds ups to a red day," said Paul Springmeyer, investment management director at U.S. Bank Wealth Managing in Minneapolis.

"There still remains quite a bit of uncertainty out there ... and returns will be fairly muted until those question marks are resolved."

At 12:49 a.m. ET (1649 GMT) the Dow Jones Industrial Average was down 100.67 points, or 0.56 percent, at 17,884.52.

The S&P 500 was down 16.78 points, or 0.79 percent, at 2,098.7. The index has not closed below 2,100, a key technical level, so far this week.

The Nasdaq Composite was down 50.35 points, or 1.02 percent, at 4,908.27.

The CBOE Volatility Index, known as Wall Street's fear gauge, jumped 11.5 percent, its steepest rise in two months.

Nine of the 10 S&P sectors were lower, with the energy index's 1.1 percent fall. Financials are now down 3.1 percent for the year, with healthcare the only other index in the red year-to-date.

The telecom services index, which comprises of five stocks, was the only gainer, led by Verizon's 1.5 percent rise.

Among the other of the few bright spots was Intel, which eked out a 0.2 percent gain.

Intel reversed course after Bloomberg reported the chipmaker would replace Qualcomm as an Apple supplier for some iPhones. Qualcomm was down 1.9 percent.

Declining issues outnumbered advancing ones on the NYSE by 2,323 to 620. On the Nasdaq, 2,111 issues fell and 598 advanced.

The S&P 500 index showed 31 new 52-week highs and no new lows, while the Nasdaq recorded 23 new highs and 34 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)