- Dec 10, 2015 · ... marks biggest weekly fall since August ... U.S. stocks face steep weekly losses as oil sinks to 7-year low ... S&P/Dow Jones Indices ...
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A relentless slide in oil prices is battering stocks. U.S. major stock-market indexes came unhinged Friday as falling prices in crude oil and worries about junk-bond markets rattled Wall Street.
Crude oil CLF6, -3.65% settled below $36 a barrel and recorded its largest weekly loss, further unnerving investors, while news that high-yield mutual fund Third Avenue Focused Credit Fund is blocking investors from withdrawing their money, served to rock investor confidence.
The nervousness comes just days before the Federal Reserve is expected to raise benchmark interest rates for the first time in nearly a decade.
“Crude is in an absolute free fall with no support,” said Kent Engelke, chief economic strategist at Capitol Securities Management Inc. “The narrative is incredibly bearish.”
The selloff in commodity markets has sent the price of crude-oil to its lowest level in seven years and has prompted a flight to safety. Demand for Treasurys surged, sending the yield on the 10-year note down 6 basis points to 2.13%—its lowest level this month, while global equities sold off.
Meanwhile, The iShares iBoxx $ High Yield Corporate Bond exchange-traded fund HYG, -2.00% dropped 2.7%.
Read also: Why the junk bond selloff is getting very scary
The stock market’s main indexes were on track to record their first weekly losses in a month, undercutting the prospect of the traditional Santa Claus rally.
The S&P 500 SPX, -1.94% slid 41 points, or 2%, to 2,010. The energy sector slumped 3.2%, with all 10 main sectors deep in negative territory.
Implied volatility on the S&P 500 as measured by the CBOE Volatility Index VIX, +26.11% rose to 24, above its long-term average of 20.
The Dow Jones Industrial Average DJIA, -1.76% was down 325 points, or 1.9% to 17,248 in recent trade, while the Nasdaq Composite COMP, -2.21% fell 113 points, or 2.3%, to 4,930—dropping below the psychologically significant 5,000 level.
Both the Dow and the S&P 500 were looking at their worst single-day decline since late September, according to FactSet data.
Engelke said worries about the impact of an imminent Federal Reserve interest-rate hike on emerging markets also pressured sentiment.
“Short-term oversold conditions are now widespread at 36% of the S&P 500,” said Katie Stockton, chief technical strategist at BTIG in her daily commentary. “We view the pullback as an opportunity to add exposure ahead of a potential Santa Claus rally, noting that positive seasonal influences tend to appear in the second half of December.”
A negative reaction from the corporate tie-up between DuPont and Dow Chemical Co.—a megamerger that has been rumored about since last week—was also battering sentiment, according to some analysts. Shares of both companies fell sharply after the announcement on Friday.
Data: U.S. retail sales showed a bit more strength in November, Commerce Department data released Friday revealed, pointing to a continued moderate pace of economic growth in coming months. A drop in car sales depressed the headline gain to a rise of 0.2%. Market reaction to data was muted.
The producer-price index for November rose 0.3%, but the so-called core number, excluding food, energy and trade, was up just 0.1%.
University of Michigan consumer confidence index rose 0.5 points to 91.8, which was below forecast by economists polled by MarketWatch.
Meanwhile, business inventories were flat in October.
The economic data had no impact on expectations that the Fed will raise interest rates for the first time in almost a decade when it meets next week. The probability of an interest-rate hike on Wednesday is at 79%, according to CME Group’s FedWatch.
“Retail sales data certainly were not bad enough to change the Fed’s opinion. The weakness we see in markets are all to do with plunging oil prices that are signaling slowing global growth,” said Jack Ablin, chief investment officer at BMO Private Bank
Movers & Shakers: DuPont shares sank 5.2% while shares of Dow Chemical fell 3.2% after the two confirmed that they would merge. The new company will be named DowDuPont and the market capitalization will be around $130 billion. Shares of both companies had rallied when the news of possible merger hit the wires early this week.
Shares of Adobe Systems Inc. ADBE, +2.77% rallied 3% after the software company posted better-than-expected quarterly results late Thursday.
GoPro Inc. GPRO, +1.70% recovered from earlier losses to rise 2.8%. The stock had jumped 11.5% on Thursday on the back of speculation the wearable-camera company could be an acquisition target for Apple Inc. AAPL, -2.57%
Shares of Whole Foods Market, Inc. jumped 8% after analysts at ITG said company’s sales trends are better than currently estimated by Wall Street. Retailer’s shares are still down more than 30% year to date.
Other markets: Asia markets closed mainly with sharp losses on the mystery surrounding the disappearance of the chairman of Fosun International Ltd., China’s biggest non-state-owned conglomerate. Traders said the news hit investor confidence in Shanghai and Hong Kong. The Wall Street Journal then reported that the Chinese executive is, in fact, assisting the government in an investigation.
European stock markets SXXP, -2.04% closed lower and the U.K.’s FTSE 100 index UKX, -2.22% fell for a seventh straight session.
After retreating earlier in the session, gold prices bounced back, while the dollar DXY, -0.31% traded mixed against other major currencies.
--Sara Sjolin contributed to this article.
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U.S. stocks face steep weekly losses as oil sinks...
Friday, December 11, 2015
Artificial Wartime low of 36 dollars a barrel for oil
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