Wall Street rally loses steam as oil prices tumble

By Abhiram Nandakumar

(Reuters) - U.S. stocks were flat in afternoon trading on Tuesday, after an early rally was wiped out as crude oil prices once again held the markets hostage.

Crude prices were on a roller coaster ride. Earlier gains were erased as they retreated towards $30 per barrel, piling the pressure on already beleaguered energy companies and casting a pall on other sectors as well.

U.S. stocks have mirrored the movement of oil prices over the past two sessions: opening higher, only to reverse course later on sharp turns in oil prices.

Seven of the 10 major S&P sectors were lower, led by a 1.9 percent drop in the energy sector.

Still, the S&P 500 held above the key 1900 level, as it did on Monday, which helped the rally at the start of the day, said Peter Cardillo, chief market economist at First Standard Financial in New York.

"We managed to successfully close above it (on Monday) and that's bringing in some buying this morning, just from a very oversold condition," Cardillo said.

At 13:01 p.m. ET (1801 GMT), the S&P 500 was down 1.93 points, or 0.1 percent, at 1,921.74. The index hit a low of 1901.10 on Monday. The Dow Jones industrial average was down 17.22 points, or 0.11 percent, at 16,381.35 and the Nasdaq Composite index was up 6.73 points, or 0.15 percent, at 4,644.72.

Only two stocks in the S&P energy sector were up. Kinder Morgan tumbled 8 percent and Williams Cos slumped 14 percent, leading the decliners.

There were a few bright spots.

The consumer discretionary sector eked out a 0.5 percent gain, led by a 2 percent jump in Starbucks to $58.98 after the coffee chain said it has not seen a slowdown in China.

The health sector, up 0.22 percent, gave up most of its early gains and the Nasdaq biotech index turned negative.

Anthem's raised 2016 profit forecast led a rally in health insurers, keeping health stocks up. Anthem rose 4.5 percent, Aetna was up 2.8 percent and Cigna 2.4 percent. UnitedHealth rose 1.7 percent, providing the biggest boost to the Dow.

Apple was up 0.8 percent at $99.35, while Intel rose 0.9 percent to $32.35 after positive ratings from BofA Merrill and JP Morgan, respectively.

Declining issues outnumbered advancing ones on the NYSE by 2,155 to 855. On the Nasdaq, 1,705 issues fell and 1,032 rose.

The S&P 500 index showed no new 52-week highs and 51 new lows, while the Nasdaq recorded 11 new highs and 229 lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D'Souza)