Eight of ten sectors end in the red led by energy and financial sectors
US stocks stock market endured another day of selling due to slumping oil prices on Tuesday, 05 January 2015 with the Dow Industrials recording its worst start to a new year the 2008 financial crisis. Indices bounced off session lows in the late-afternoon trade. The benchmark S&P 500 index fell for the fifth-straight session. Slumping oil prices and flight to havens such as Treasury led to a bout of selling for the second consecutive day.
The Dow Jones Industrial Average dropped 130 points, or 0.7%, to 17,371.64. The Nasdaq Composite fared the worst, dropping 59.84 points, or 1.3%, to 4,592.74, ringing up a fifth-straight day of losses. The S&P 500 closed 17.97 points, or 0.9%, lower at 2,002.61.
Eight of ten sectors ended in the red with only two sectors remaining in the green utilities and telecoms. Energy and financial sectors led the laggards.
The stock market held up relatively well through the first hour of action, but the return of some recent concerns pressured cyclical sectors and the broader market into negative territory.
Most world stock markets saw follow-through selling pressure on Tuesday, following solid losses suffered on Monday. Worries about plunging crude oil prices leading to general price deflation and concerns about the financial, political and economic health of the European Union are the main factors producing a risk-off attitude in the market place so far this week. The risk aversion has hit the stock markets hard, but benefited the safe-haven markets, including gold, the U.S. dollar and U.S. Treasuries.
Meantime, the U.S. dollar index is hovering near this week's 10-year high.
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The Euro currency has this week dropped to a nine-year low against the greenback, mainly due to ideas the European Central Bank will act soon to stimulate European Union monetary policy. In overnight news, the EU got another dour economic report on Tuesday. The Markit composite purchasing managers index (PMI) came in at 51.4 in December from 51.1 in November. However, the December figure did not meet market expectations. A reading above 50.0 suggests expansion in the sector. The recent string of weaker EU economic data suggests the European Central Bank could act to stimulate its monetary policy at its next regular meeting on January 22.
There was a heavier slate of U.S. economic data released on Tuesday that included the U.S. services purchasing managers' index (PMI), the global services PMI, manufacturers' shipments and orders, and the ISM non-manufacturing report on business. That data was a mixed bag and had little impact on the markets.
Factory orders posted their fourth consecutive monthly decline, falling 0.7% in November which was worse than the 0.4% decline expected by the consensus. The October reading was left unrevised at -0.7%. Orders for durable goods declined 0.9%, which was more than a previously reported 0.7% decline. Nondurable goods orders, meanwhile, declined 0.5%. Shipments, which factor into GDP growth, declined 0.6% in November on top of a 0.9% decline in October.
Separately, the ISM Services Index for December fell to 56.2 from 59.3 while the consensus expected a downtick to 58.5. The dip in December was driven by a pullback in all index categories with two indices falling into contraction: Backlog of Orders Index fell to 49.5 from 55.5 and prices Index fell to 49.5 from 54.4.
Bullion prices ended higher at Comex on Tuesday, 06 January 2015. Gold prices advanced for a third session on Tuesday, helped by fresh demand for a safe haven in a new year that, so far, has been rough on stocks and other riskier assets. Gold for February delivery rallied $15.40, or 1.3%, to settle at $1,219.40 an ounce. March silver gained 42 cents, or 2.6%, to $16.64 an ounce.
Crude prices ended lower at Nymex on Tuesday, 6 January 2014. The crude-oil collapse continued unabated Tuesday, with the U.S. benchmark closing below $48 a barrel for the first time since April 2009 as worries over Greek debt were added to a litany of bearish factors, including a global supply glut and a rising U.S. dollar.
On the New York Mercantile Exchange, light, sweet crude for delivery in February fell $2.11, or 4.2%, to close at $47.93 a barrel, its lowest finish since April 2009.
Today's participation was well ahead of average with more than 915 million shares changing hands at the floor of the New York Stock Exchange.
Tomorrow the weekly MBA Mortgage Index will be released at 7:00 ET while the December ADP Employment Change report (consensus 230K) will cross the wires at 8:15 ET. The November trade deficit (consensus $41.80 billion) will be reported at 8:30 ET while the FOMC Minutes from the December meeting will be released at 14:00 ET.
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