The uncertainty over oil prices caused energy stocks in the S&P 500 to decline 1.7% Wednesday.
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“Tumble” and “plunge” were the two most common words in the financial media last week as markets around the globe declined by large amounts to start the 2016 trading year.
The Dow Jones industrial average sank 364 points, or 2.2%, to 16,151. The S&P 500 was down 2.3 percent and the Nasdaq lost 3 percent.
The Nasdaq composite shed 159.85 points, or 3.4 per cent, to 4,526.06.
Looking at historical data, I used the longest running index in the U.S., that being the Dow Jones Industrial Average, and pulled daily data back to February 16 of 1885. The benchmark S&P/ASX 200 fell as much as 2 percent before regaining some lost ground to end the session down 78 points or 1.56 percent at 4,909.40. South Korea’s Kospi added 1.4 percent to 1,916.57.
Japan’s Topix index slumped 2.9 percent after jumping 2.9 percent on Wednesday.
In China, the Shanghai composite fell 5.3 percent.
After once again failing to sustain an initial upward move, stocks have come under pressure over the course of the trading session on Wednesday. The cost to protect against defaults by North American investment-grade companies soared to a three-year high, a measure of junk bonds had the worst day in a month and last year’s equities winners stumbled, with consumer staples and technology shares bearing the brunt of losses.
Shares of Samsung Electronics dropped 0.9 percent. The Russell 2,000 index is in bear market territory – down more than 20 percent from its high in June.
On the economic front, the number of job openings was little changed at 5.4 million on the last business day of November, the U.S. Labor Department reported Tuesday. Brent crude, a benchmark for global oils, lost 11 cents, or 0.3 percent, to $34.14 a barrel in London.
RBS’s credit chief, Andrew Roberts has warned investors this week that a 20% drop in stock markets could result from a sustained period of turmoil in 2016.
CHINA TURMOIL: After a tumultuous start to the year for Chinese stocks and the yuan, both those markets showed tentative stability, likely at least partly due to government efforts to control fluctuations in the yuan. Other regional markets were also lower, falling in Taiwan, Singapore, Australia and Indonesia.
Apple ended up 1.5 percent at $99.96 after Bank of America Merrill Lynch analysts upgraded their rating on the stock, while Intel rose 1.9 percent to $32.68 after J.P. Morgan gave upbeat comments on the stock.
The yield on the 10-year Treasury note fell to 2.07 percent from 2.11 percent late Tuesday.
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Stocks in Asia followed suit with the Nikkei Index in Tokyo more than 3% lower overnight and Hong Kong went down by 1%. After the data, the Australian dollar (Exchange:AUD=)popped up to as high as $0.6961, compared with around $0.6927 before the data, but the currency quickly retraced the gains to trade around $0.6928. The report underscores the challenge facing policy makers heading into their meeting later this month: The labour market is strengthening without triggering signs of higher wages or inflation more broadly.
