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Wednesday, December 10, 2014

Wall Street indexes drop more than 1% as energy falls further

US stocks lost more than 1 percent today in the S&P 500's biggest decline since Oct. 13 as another big drop in oil prices hammered energy shares.

The S&P 500 has lost 2.4 percent this week so far, reversing a recent trend. The Dow and S&P 500 had capped a seventh straight week of gains on Friday.

Selling accelerated in afternoon trading, and by day's end, NYSE declining issues outnumbered advancers by a ratio of 4.66 to 1 ratio. In a sign of rising investor caution, the CBOE Volatility index rose 24.5 percent, its biggest daily percentage gain since July 31.

The S&P energy index fell 3.1 percent and led declines on the S&P 500, but selling was broad and all 10 S&P sector lost at least 1 percent on the day.

Brent crude touched a new five-year low of $63.56 as Saudi Arabia's oil minister reiterated that he has no plans to cut output, while OPEC forecast global demand for OPEC crude in 2015 to fall to the lowest level in more than a decade.

Falling oil prices have added to worries about global demand and raised concerns about earnings for energy companies, with year-end tax selling putting additional pressure on the group. The S&P energy sector is now down 14.7 percent for 2014, the worst performing of the 10 major S&P sectors.

The Dow Jones industrial average fell 268.05 points, or 1.51 percent, to 17,533.15, the S&P 500 lost 33.68 points, or 1.64 percent, to 2,026.14 and the Nasdaq Composite dropped 82.44 points, or 1.73 percent, to 4,684.03.

European stocks fell for a third session in a row as a further plunge in crude prices knocked down the shares of oil majors and oil services groups such as Royal Dutch Shell and Fugro.

Airbus shares also featured among the top losers after the aircraft manufacturing group's new profit outlook disappointed investors and the firm said the first delivery of the new A350 had been postponed and no new date had been set.

The stock tumbled 10.4 percent - its biggest one-day drop in more than six years - representing a wipeout in the company's market value of 3.9 billion euros ($4.8 billion), roughly the price of a dozen Airbus A380 jumbo jets.

Shares in Shell dropped 2.4 percent and Fugro tumbled 11 percent as Brent crude oil fell below $65 a barrel on mounting signs of oversupply and lacklustre demand as global economic growth falters.

In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast demand for the group's oil will drop to 28.92 million barrels per day (bpd) in 2015, down 280,000 bpd from its previous expectation.

The STOXX oil and gas index, home of bellwethers such as BP, Total and Eni, has tumbled 27 percent since June. The sell-off has wiped $280 billion off market capitalisation of the sector, nearly the size of Israel's GDP.

The FTSEurofirst 300 index of top European shares ended 0.4 percent lower at 1,357.21 points. The index has tumbled 3.4 percent so far this week.

Meanwhile, Japanese stocks slipped as a stronger yen prompted investors to sell exporters' shares, while concerns on political uncertainty in Greece and falling oil prices dampened risk appetites.

The Nikkei benchmark shed 2.3 percent to close at 17,412.58, its lowest since November 28.

A stronger yen saw exporters Fanuc Corp 6954.T drop 3.3 percent and Nissan Motor Co 7201.T fall 3.4 percent. Toyota Motor Corp 7203.T tumbled 3.1 percent.

The broader Topix slipped 2.0 percent to 1,406.83, and the JPX-Nikkei Index 400 shed 2.2 percent to 12,765.54.

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Tags:  Stocks  shares  FTSEurofirst  Nikkei  US  Dow Jones  





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