US close: Odds of Fed rate hike slip

Stocks fell sharply as the slightest of hints from China that it might loosen the link between its currency and the US dollar sent oil crashing lower, weighing on the main equity benchmarks, emerging markets and high-yield US debt.

The Dow Jones Industrials slid 1.76% to 17,726.21, the S&P 500 by another 1.94% to hit 2012.37 and the Nasdaq Compositeby 2.21% to 4,933.47.

MSCI´s Emerging Markets Index ended 5% lower for the week, the S&P 500 off by 3.8% - its worst week since last August - and the US Dollar Index advanced 2.3%.

Chinese central bank rattles markets

In an editorial posted to its website on 11 December, China’s central bank said it had begun to estimate the value of the yuan versus a basket of currencies, instead of just the US dollar.

Oil futures took the worst hit, as the news came amid an already weak backdrop in the crude market.

Front month West Texas crude futures slid 3.81% to $35.36 per barrel on the NYMEX.

Earlier in the day, the IEA, the rich world´s oil watchdog, had said OECD oil stocks would continue to rise, albeit far more slowly, until well into 2016.

Probability of Fed rate hike comes down

To take note of, the probability of the Fed hiking rates at its 15-15 December meeting slipped from 80% earlier in the week to 72% on Friday, according to calculations by Bloomberg.

The risk premium on the Markit CDX North American High Yield Index jumped by 36 basis points to 514.52 basis points, its highest since December 2012.

Consumer confidence holding up, analysts say

The University of Michigan’s preliminary estimate on the consumer confidence index rose to 91.8 in December from 91.3 in November, below estimates for a reading of 92.

The growth in confidence was attributed to households at the bottom two-thirds of the income ladder and took the yearly average to 92.9, which was the highest level since 2004.

"We feared a weaker reading, following the decline in the Bloomberg consumer comfort index, so we are quite relieved by this report," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"For the Fed, the aggregate is what counts, and we see nothing here to change our view that both total spending and employment will continue to rise at a robust pace."

Dow Chemical and DuPont slide after announcing tie-up

Alibaba slumped on news it has agreed to buy the South China Morning Post and other media assets of SCMP Group Limited for an undisclosed sum.

Shares in Chipotle Mexican Grill ended lowere even after its chief executive apologised on national television for the company’s food safety crisis and said the group was evaluating its procedures.

Dow Chemical and DuPont both tumbled after they agreed to a merger that would create a combined company with a market capitalisation of around $130bn.

S&P 500 - Risers
Whole Foods Market Inc. (WFM) $34.02 +8.59%
Corning Inc. (GLW) $18.68 +5.60%
CSX Corp. (CSX) $25.72 +4.13%
Centerpoint Energy Inc. (CNP) $16.69 +3.41%
Adobe Systems Inc. (ADBE) $91.42 +2.77%
Mattel Inc. (MAT) $26.25 +2.66%
Norfolk Southern Corp. (NSC) $89.44 +2.01%
First Solar Inc. (FSLR) $55.26 +1.67%
Ventas Inc. (VTR) $54.38 +1.40%
Electronic Arts Inc. (EA) $67.17 +1.21%

S&P 500 - Fallers
Southwestern Energy Co. (SWN) $5.90 -13.99%
Williams Companies Inc. (WMB) $26.42 -10.98%
Range Resources Corp. (RRC) $22.75 -10.47%
Cabot Oil & Gas Corp. (COG) $16.10 -8.94%
ONEOK Inc. (OKE) $20.31 -8.92%
Chesapeake Energy Corp. (CHK) $4.16 -8.77%
CONSOL Energy Inc. (CNX) $6.99 -8.03%
Baker Hughes Inc. (BHI) $47.80 -7.51%
Apache Corp. (APA) $42.92 -7.08%
United States Steel Corp. (X) $8.25 -6.57%

Dow Jones I.A - Risers

Dow Jones I.A - Fallers
E.I. du Pont de Nemours and Co. (DD) $70.44 -5.51%
Chevron Corp. (CVX) $86.44 -3.20%
Goldman Sachs Group Inc. (GS) $176.56 -3.05%
Merck & Co. Inc. (MRK) $52.15 -2.87%
Apple Inc. (AAPL) $113.18 -2.57%
Visa Inc. (V) $76.11 -2.57%
Walt Disney Co. (DIS) $108.04 -2.46%
JP Morgan Chase & Co. (JPM) $64.07 -2.35%
Cisco Systems Inc. (CSCO) $26.16 -2.28%
Microsoft Corp. (MSFT) $54.06 -2.19%