U.S. stock indices fell sharply on Tuesday with energy and financial stocks leading declines amid lower oil prices.

The Dow Jones Industrial Average lost 295.64 points, or 1.8%, to 16,153.54. The S&P 500 fell 36.35 points, or 1.9%, to 1,903.03 (its energy and financial sectors fell by 3.3% and 2.6% respectively). The Nasdaq Composite dropped 103.42 points, or 2.2%, to 4,516.95.

Business activity in New York declined sharply to the lowest level in four months in January beating analysts' expectations. A report from the Institute for Supply Management showed that the business conditions index fell to 54.6 points in January from 62.0 points in the previous month. Analysts had expected the index to slide to 61.0. Nevertheless the index remained well above the neutral 50 points mark suggesting expansion.

Meanwhile the business confidence index calculated by Investor's Business Daily and TechnoMetrica Institute of Policy and Politics rose by 0.5 points to 47.8 in January (the best result since July 2015). The latest reading was in line with expectations. A reading above 50 points suggests optimism, while a reading below this mark means pessimism.

This morning in Asia Hong Kong Hang Seng lost 2.74%, or 532.28, to 18,914.56. China Shanghai Composite Index fell 1.57%, or 43.14, to 2,706.43. The Nikkei plunged 3.30%, or 584.98, to 17,165.70.

Asian stock indices fell amid plunging oil prices and unstable condition of the global economy. A stronger yen put additional pressure on Japanese stocks.