U.S. stocks extend losses as oil weakness weighs

U.S. stocks traded lower in the morning session on Friday, as weakness in oil prices weighed on Wall Street sentiment.

By midday, the Dow Jones Industrial Average dropped 232.23 points, or 1.33 percent, to 17,263.61. The S&P 500 decreased 21.50 points, or 1.05 percent, to 2,020.39. The Nasdaq Composite Index moved down 37.07 points, or 0.74 percent, to 4,965.48.

Oil prices wavered near their lowest level in nearly seven years in the morning session Friday, as bearish sentiment rattled the market.

On Thursday, oil prices continued to fall as global supplies exceed the demand. U.S. crude supplies of last week gained 4.8 million barrels to 490.7 million barrels, 110.7 million barrels more than one year before.

"For the time being, the most decisive move has been in commodities, where a tightening Fed is pretty clearly bad news no matter what follows from it," said Chris Low, chief economist at FTN Financial, in a note.

On the economic front, the seasonally adjusted Markit Flash U.S. services PMI Business Activity Index registered 53.7 in December, missing market consensus and logging the lowest reading for 12 months.

Meanwhile, investors were still sifting through the Federal Reserve's decision to raise interest rate for the first time in nearly a decade.

Analysts believed the stock markets would witness some volatility in recent days as Wall Street tries to digest the rate hike decision.

On Thursday, U.S. stocks snapped a three-day winning streak to end sharply lower, as investors assessed the impacts of U.S. central bank's rate hike decision. Endit