Treasury prices rose, sending yields lower. Though the drop in the oil price can help consumers and businesses by reducing energy bills, the recent decline has been weighing on stocks as investors worry it is a sign of a weak global economy.
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Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 5.7 percent, while the NYSE Arca Oil & Gas Index and the Philadelphia Oil Service Index slumped by 3.6 percent and 2.9 percent, respectively.
“We also have crude prices which are doing some pretty unbelievable things at the moment and which are having an impact on the inflation outlook again”. It is now up 70 percent in just five days.
THE QUOTE: “We’re stockpiling commodities and demand is not picking up”, said Tim Courtney, chief investment officer of Exencial Wealth Advisors. “It’s kind of a depressing market”.
The market has grown increasingly volatile as investors look ahead to next week’s meeting of the Fed’s policy-making committee and what the central bank has signaled will likely bring its first interest rate hike in almost a decade.
Investors will watch economic data today for evidence that the US recovery is strong enough to withstand higher borrowing costs.
TYCOON TURMOIL: Analysts said Chinese investor sentiment was hit by a news report that Guo Guangchang, the billionaire tycoon chairman of one of the country’s biggest conglomerates, Fosun International, has gone missing.
Traders are also anxiously awaiting weekend reports on retail sales and industrial production in China, the world second-largest economy, which has faltered in recent months. Further out, a report on foreign direct investment in China is due on Wednesday. Benchmark U.S. crude dropped 22 cents, or 0.6 percent, to $36.94 a barrel in NY. The Dow Jones Industrial Average sank 195.27 points, or 1.1 per cent, to 17,379.48. Dow Chemical fell $2.31, or 4 per cent, to $52.60.
The sell-off on Wall Street was largely due to a continued decrease by the price of crude oil, which has fallen sharply amid ongoing concerns about global oversupply.
EUROPE DOWN: Britain’s FTSE 100 dropped 2.2 percent.
Both DuPont (DD.N) and Dow Chemical (DOW.N) shares were down following a deal valuing the combined entity at $130 billion, falling 5.5 percent and 2.8 percent respectively. The stock fell 3 percent in the first few minutes of trading.
In Asia overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.1 percent. In South Korea, Kospi Index declined 0.41% and China’s Shanghai Composite Index fell 0.85%.
For the week, the CSI300 was down 1.9 percent while the SSEC was off 2.6 percent. The struggling clothes chain is down 68 percent since the start of 2015.
CORNING RISES: Corning rose 88 cents, or 5 percent, to $18.57 after the company said it will give up its stake in Dow Corning, a joint venture with Dow Chemical. Yahoo said it will instead explore breaking off the rest of its business into a new company.
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On the currency front, the USA dollar is trading at 121.45 yen compared to the 121.56 yen it fetched at the close of NY trading on Thursday.
