NEW YORK–US stocks fell yesterday as oil prices turned sharply lower and spooked investors into dumping shares of drillers and other energy-service companies.
The drop in oil weighed on stocks from the start of trading. Weak trade figures out of China and news that Japan's recession is deeper than initially thought suggested demand for crude would be lower in those two economies. Among the big losers were two Dow Jones industrial average components, Chevron, down 3.7 per cent, and Exxon Mobil, off 2.3 per cent.
More broadly, the six-month drop in oil, which has brought the price of crude down to the lowest level in five years, suggests headwinds for the US economy, said Bill Strazzullo, chief market strategist at Bell Curve Trading."When you look at the major drivers of global growth–Japan, China and the eurozone–they're really struggling," he said. "Can the US continue to grow at a moderate pace when the rest of the world is having major problems?"
Energy shares in the Standard and Poor's 500, a broader index than the Dow, dropped to their lowest level in nearly two years. The decline of 3.9 per cent was by far the biggest percentage drop among the ten sectors in the index. Six of the ten sectors fell.Selling was especially fierce in shares of smaller companies in the oil business. Cimarex Energy, Transocean, and Noble Energy were each down at least 5 per cent.
The Dow lost 106.31 points, or 0.6 percent, to 17,852.48. The Standard & Poor's 500 index fell 15.06 points, or 0.7 per cent, to 2,060.31. The Nasdaq composite fell 40.06 points, or 0.8 per cent, to 4,740.69US stocks have been rising steadily since mid-October. An encouraging jobs report on Friday showing the biggest burst in hiring in nearly three years helped push the S&P 500 to a record, capping a seven-week winning streak, its longest this year.
For its part, the Dow came within nine points of breaching 18,000 points on Friday, just six months after passing 17,000.
AP