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US stocks drop as oil tumbles, Nasdaq -2.2%

New York - US stocks fell sharply on Tuesday, tumbling with European equities as another drop in oil prices underscored worries about global growth.

The Dow Jones Industrial Average lost 295.64 points (1.80%) to 16 153.54.

The broad-based S&P 500 fell 36.35 (1.87%) to 1 903.03, while the tech-rich Nasdaq Composite Index shed 103.42 (2.24%) to 4 516.95.

Oil prices extended sharp losses for a second day, with the US benchmark closing under $30 a barrel for the first time since January 21.

"It's all about oil today, there's no question about that," said Peter Cardillo, chief market economist at First Standard Financial.

"It's a question of strength and weakness, and so weaker oil prices just means weaker economic activity."

Google parent Alphabet was a rare winner, gaining 1.7% to overtake Apple as the world's most valuable company after reporting a five percent rise in fourth-quarter earnings to $4.92bn.

Falling oil took its toll. ExxonMobil fell 2.2% after reporting its weakest quarterly profits since 2002 and US shares of BP sank 8.5 percent after reporting a $6.5bn loss for 2015.

Standard & Poors also downgraded the credit ratings of 10 oil companies and announced reviews of another 10. Two of the downgraded companies, Chevron and Marathon Oil, fell 4.8% and 10.3%, respectively.

Investors sold off banking sector stocks, with Goldman Sachs losing 5.0%, Bank of America 5.2% and Citigroup 4.9%.

Mattel surged 13.8% after reporting fourth-quarter net income of $215.2m, up 10.8% from the year-ago level and better than expected. Worldwide sales of its iconic "Barbie" doll rose one percent.

Royal Caribbean Cruises sank 15.2% after it projected 2016 earnings of $5.90 to $6.10 per share, below the $6.27 expected by analysts. Rival firm Carnival fell 7.9%.

Dow Chemical jumped 5.8% after reporting better-than-expected earnings and announcing that chief executive Andrew Liveris would leave the company after it merges with DuPont.

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