Withering sell off among energy companies weigh on market momenetum
U.S. stocks suffered their biggest one-day slide in nearly seven weeks on Monday, 08 December 2014 as a withering sell off among energy companies, which closely tracked oil's continued price slide, dragged down key benchmark indexes. Downbeat economic reports form China, Japan and Europe also dented sentiment.
The Dow Jones Industrial Average dropped as much as 150 points at session lows, but ended 106.31 points, or 0.6% lower, at 17,852.48. The tech-heavy Nasdaq Composite ended the day with a loss of 40 points, or 0.8%, at 4,740.69. S&P 500 closed 15 points, or 0.75, at 2,060.31.
Losses were led by energy companies, as the sector dropped 3.9%. Materials, industrials and technology sector stocks also sold off, while defensive sectors such as utilities and health care drew buyers.
McDonald's took a bite out of the blue-chip stock index following disappointing sales. Oil giants ExxonMobil and Chevron also weighed on the index, dropping 2.3% and 3.7% respectively. The heaviest-weighted component in tech scetor, Apple fell 2.3%.
Equity markets around the world started the new week on a mostly lower note. However, continued hopes for stimulus from the PBoC sent China's Shanghai Composite higher by 2.8% to extend its gain over the past month to 25.0%. The advance took place after the latest trade data showed a better than expected surplus of $54.47 billion, which resulted from a 6.7% drop in imports (expected +3.5%).
The U.S. dollar hit a seven-year high against the Japanese yen and hit a two-year high against the Euro currency Mondayin the aftermath of Friday's much-stronger-than-expected U.S. jobs report. However, the dollar index did back down from its high on some profit taking as the session progressed on Monday.
In other overnight news, there was another downbeat economic report coming out of China. The world's second-largest economy saw its exports rise by 4.7% in November, which was well below expectations for a gain of 8.0%. Imports were down 6.7% versus expectations for a rise of 3.9%. This news is also a bearish underlying factor for the raw commodity sector, as China is the world's biggest importer of raw commodities.
And in Japan, gross domestic product in the third quarter was reported at minus 1.9%, which was below expectations. Japan is now in economic recession.
European Central Bank official Ewald Nowatny said Monday the weakening of the Euro zone economy has been massive. The OECD issued a report Monday saying the already-weak economic growth in the European Union will slow further in the coming months, including the potential for the EU to fall back into recession. The OECD forecast slowdowns in the economies of the U.K. and Russia, too. The agency said economic growth in the rest of the world's major economies will remain near present levels.
Bullion prices rebounded on Monday, 08 December 2014 at Comex as weak global economic data revived safe-haven demand for the precious metal. The gold market on Monday showed resilience in the face of bearish outside markets that saw the U.S. dollar index hit a four-year high overnight, while crude oil prices hit a five-year low during the U.S. trading session.
Gold for February delivery rose $4.50 to settle at $1,194.90 an ounce. On Friday, gold prices slumped in reaction to a better-than-expected jobs report. Still, the precious metal managed a 1.3% gain for the week. March silver gained 2 cents to $16.27 an ounce.
Crude-oil prices again tumbled to five-year lows on Monday, 08 December 2014 at Nymex pressured by forecasts that a global glut of oil will persist into the first half of next year.
On the New York Mercantile Exchange, crude futures for January delivery dropped $2.79, or 4.2%, to settle at $63.05 a barrel. The U.S. oil benchmark logged the lowest settlement for a front-month contract since July 16, 2009.
Treasuries ended the day near their highs with the 10-yr yield slipping five basis points to 2.26%.
Today's participation was in-line with average as roughly 794 million shares changed hands at the NYSE floor.
Tomorrow's economic data will be limited to October Wholesale Inventories (consensus 0.2%) set to be released at 10:00 ET.
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