While you were sleeping: UPDATED Energy stocks slide with oil

Losses in energy shares helped drag Wall Street lower as the price of oil retreated to near $US40 a barrel.

Energy stocks in the S&P 500 fell 3.4%, their worst day since the end of June, as US crude oil lost 3.7% to $US40.06 a barrel.

A glut of fuels and growing global production has weighed on crude prices recently, pulling oil down more than 20% since June 8 and into a bear market.

"It's stop-loss technical selling combined with sheer liquidation by those fearing we'll soon be swimming in oil again," Phil Davis, a trader at PSW Investments in San Diego, California, told Reuters.

"We've had crude builds during the summer when we were supposed to be having runaway draws from record driving."

At the close, the Dow Jones Industrial Average was down 27.73 points, or 0.15%, to 18,404.51. The Nasdaq Composite Index rose 0.4% to 5184.20 and  the Standard & Poor's 500 Index slipped 0.1% t0 2170.84.

In the Dow, declines in shares of Exxon Mobil and Chevron, down 3.5% and 3.3% respectively, outweighed gains in shares of Apple and those of Pfizer, up 1.5% and 1.3% respectively.

Manufacturing slows
Following Friday's report showing weaker-than-expected US economic growth in the second quarter, separate reports showed that manufacturing grew at a slower pace in July while construction spending unexpectedly declined in June.

The Institute for Supply Management's index fell to 52.6, down from 53.2 a month earlier.

A Commerce Department report showed construction spending slid 0.6% to a one-year low, following a 0.1% decline in May.

"The assumptions for June construction spending plugged into the advance GDP estimate were optimistic," Ted Wieseman, an economist at Morgan Stanley in New York, told Reuters.

"The government hasn't released all of its assumptions yet but these figures look consistent with second-quarter GDP growth being revised down to 1.1% or 1.0%."

In fresh deal news, shares of SolarCity sank 7.4% after Tesla agreed to buy the company for about $US2.6 billion, less than previously proposed. Tesla shares traded 2% weaker.

"I'm not sure it's a great deal for Tesla shareholders," Maryann Keller, a former Wall Street analyst who is now an auto industry consultant in Stamford, Connecticut, told Bloomberg.

Tesla chairman Elon Musk "can probably sell it based on his cult of personality. The true believers will buy into it."

Verizon said it would acquire mobile workforce solutions company Fleetmatics Group for $US2.4 billion. Verizon shares lost 1.6%, while Fleetmatics’ stock surged by 39%.

'Soft' stress tests
In Europe, the Stoxx 600 Index finished the day with a slide of 0.6% from the previous close. Germany's DAX index slipped 0.1%, the UK's FTSE 100 index dropped 0.5%, while France's CAC 40 index shed 0.7%.

Investors were wary about the results of so-called stress tests by European regulators, announced last Friday after the market closed. The results showed that the region's banks overall are on a steadier footing.

"Investors are sceptical about everything these days," Peter Garnry, head of equity strategy at Saxo Bank in Hellerup, Denmark, told Bloomberg.

"The problem with the stress tests is that they were too soft, only assuming a mild to moderate recession. This means that the data doesn't tell us much, and it's not too surprising that most banks passed. What could drive markets higher from here is any sign that the global economy is picking up."

(BusinessDesk)