Canada's benchmark stock index closed sharply lower on Tuesday as energy shares dived alongside oil prices, while Cenovus Energy Inc (CVE.TO) tumbled after the company said its chief executive was stepping down.

Cenovus said it would replace Chief Executive Brian Ferguson, who championed an unpopular purchase of western Canadian oil sands assets, but did not name a successor, sending its shares down 8.2 per cent to close at $9.44. Earlier in the session, shares touched a record low of $9.11.

The overall energy group fell 2.2 per cent, paring some of its earlier losses, but still hitting its lowest since April 2016. Oil and gas company shares fell as crude prices slumped following news of increases in supply by several key producers.

U.S. crude prices, which traded around nine-month lows, were down 2.2 per cent to US$43.34 a barrel after falling more than three per cent earlier in the session.

"There's no apparent relief in terms of [OPEC] cooperation and production cutback," said Michael Sprung, president at Sprung Investment Management Inc. Sprung said an increase in consumption during the summer driving months would hopefully curtail inventory builds.

Enbridge Inc (ENB.TO) fell two percent to $50.06, while Suncor Energy (SU.TO) fell 2.3 per cent to $38.11.

Bank shares, which had rallied on Monday, also lost ground. Royal Bank of Canada (RY.TO) fell 0.6 per cent to $93.76, while the overall financial services group fell 0.5 per cent.

"Financials — they are stronger then the markets are giving them credit for," said Sprung, adding that concerns remained about the housing sector.

Shares of Home Capital Group Inc (HCG.TO) climbed 4.3 per cent to $15.42 after the alternative lender said it would sell a portfolio of commercial mortgage assets valued at $1.2 billion to private equity firm KingSett Capital.

The Toronto Stock Exchange's S&P/TSX composite index fell 116.44 points, or 0.76 per cent, to 15,149.60.

Nine of the index's 10 main groups were lower. Industrials fell 0.7 per cent as railroad stocks lost ground, while the materials group, which includes precious and base metals miners and fertilizer companies, declined 0.5 per cent.

Gold futures fell 0.2 per cent to US$1,241.5 an ounce as the U.S. dollar climbed and copper prices declined 1.0 per cent to US$5,668 a tonne.

Health care also fell sharply, retreating one per cent.

Canadian wholesale trade rose more than expected in April, led by the machinery industry, data from Statistics Canada showed. The 1.0-per-cent increase topped economists' estimates for a gain of 0.5 per cent.

U.S. MARKETS

U.S. stocks closed lower on Tuesday as a sharp drop in oil prices hurt energy stocks and retail stocks were pulled down by concerns about Amazon.com's (AMZN.O) plan to boost its apparel business, while investors also worried about future Federal Reserve rate hikes.

Health care was the brightest spot in stocks with a 0.3 per cent rise while the consumer discretionary index showed a 1.25-per-cent drop in line with the energy index decline.

Oil prices fell about two per cent after news of increases in supply by several key producers, a trend that has undermined attempts by OPEC and other producers to support the market through reduced output.

"People really thought [US]$45 to [US]$55 was kind of the range of oil, but it is getting weaker and weaker and U.S. producers are getting more and more efficient," said Ken Polcari, Director of the NYSE floor division at O'Neil Securities in New York.

The market deepened its losses heading into the close after comments by Dallas Federal Reserve President Robert Kaplan appeared to add to investor unease about the Fed's projected pace of monetary policy tightening.

Kaplan said technology and globalization is holding down U.S. inflation, which suggested that low inflation might linger, said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"Today's action reflects growing investor concern about the Fed's designated path of tightening versus what the market is saying, exemplified in the fed funds futures market and the lower yield and the lower inflation reports," said Hellwig.

Earlier, Boston Fed President Eric Rosengren said the era of low interest rates in the United States and elsewhere poses financial stability risks and that central bankers must factor such concerns into their decision-making.

The Dow Jones Industrial Average was down 61.85 points, or 0.29 per cent, to 21,467.14, the S&P 500 had lost 16.43 points, or 0.67 per cent, to 2,437.03 and the Nasdaq Composite had dropped 50.98 points, or 0.82 per cent, to 6,188.03.

Some investors were holding back ahead of a congressional election in Atlanta, according to Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida.

He sees the costliest U.S. congressional race in history — between Democrat Jon Ossoff and Republican Karen Handel — as a key political test for President Donald Trump's pro-business agenda.

Nasdaq's biotechnology index rose 1.3 per cent after a 2.5-per-cent jump the previous day.

The S&P technology sector fell 0.8 per cent, with the biggest drags from Microsoft (MSFT.O) and Apple (AAPL.O).

Declining issues outnumbered advancing ones on the NYSE by a 2.48-to-1 ratio; on Nasdaq, a 2.28-to-1 ratio favored decliners.

The S&P 500 posted 49 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 99 new highs and 87 new lows.

About 7.1 billion shares traded on U.S. exchanges compared with the 6.86 billion average for the last 20 sessions.