US close: S&P 500 hits oil slick, slips into 'correction' territory
Wall Street slipped on an oil slick in a holiday-shortened session following the Thanksgiving holiday, with thinner than usual trading volumes making matters worse as energy futures continued their retreat and with the S&P 500 falling into so-called 'correction' territory after dropping by more than 10% from its most recent peak.
The Dow Jones Industrial Average ended down by 0.73% or 178.74 points to 24,285.95, alongside a fall of 0.66% or 17.37 points on the S&P 500 to 2,632.56, while the Nasdaq Composite was off by 0.48% or 33.27 points to 6,938.98.
For the week, the S&P 500 was left nursing losses of 3.8%.
Energy stocks were again in focus as oil prices hit a fresh 2018 low amid worries about a global supply glut. West Texas Intermediate was down 6.26% to $51.21 a barrel on NYMEX and Brent crude was 5.0% lower at $59.47 in ICE trading.
Unsurprisingly, by sectors it was Exploration & Production stocks (-3.74%) that fared worst, followed by Marine Transportation (-3.33%) and Oil & Gas (-3.22%).
Going the other way, the best performing areas of the market were: Airlines (2.03%), Recreational services (1.69%) and Food & Drug Retailers (1.06%).
However, throughout most of the session, the proportion of companies' shares that were rising outnumbered that of those that were falling on both the NYSE and NASDAQ, although by the closing bell that only remained true for the latter.
Linked to the above, in a research note sent to clients, analysts at Morgan Stanley pointed out how net speculative positioning on the NASDAQ was now 'net short' - a "rare ocurrence" over the past eight years.
"The AAII Bulls minus Bears this week fell to the lowest level since Feb-2016," they added.
Commenting on the price action, Oanda analyst Craig Erlam said: "Whether it's a case of recovering from the previous days celebrations or taking advantage of the deep discounts in store and online, activity in the US is likely to be more muted on the final trading day of the week. And who knows, maybe after a day of grabbing bargains, some of that Black Friday mentality may rub off investors with many stocks now trading at a deep discount themselves compared to a couple of months ago.
"We're not quite seeing that rub off on the markets just yet though with US futures trading in the red but we're heading into a very interesting time of year and they may well now be primed for a so-called Santa rally as all the festive good will finds its way onto Wall Street."
Offsetting the drag from oil during the first part of the session, investors were mulling over encouraging remarks from US President Trump and two top Chinese officials regarding the prospects for reaching a trade deal ahead of the G-20 meeting in Buenos Aires at the end of the month.
Donald Trump reportedly said overnight that "[China] wants to make a deal and we're very happy with that. I'm very prepared, I've been preparing for it all my life".
Meanwhile, in China, the country's vice minister of Foreign Affairs, Wang Chao, said he hoped a meeting between Trump and his Chinese counterpart, Xi Jinping, would go "smoothly".
He was echoed by the vice minister of Commerce, Wang Shouwen, who said that negotiating teams from Washington and Beijing had been "in close touch".
On the data front, IHS Markit's manufacturing PMI for November printed at 54.4 for November, which was down from a reading of 54.9 in October, hitting a two-month low in the process.
Yet according to Chris Williamson, chief business economist at the survey compiler: "Solid flash PMI numbers for November add to evidence that the US is enjoying sustained robust economic growth in the fourth quarter. The surveys are broadly consistent with the economy growing at an annualised rate of 2.5%, building further on the country’s best growth spell since 2014 seen in the second and third quarters."