US close: Stocks drop as oil prices plunge below $30
US stocks closed in the red on Friday as oil prices fell below $30 per barrel and as traders processed a batch of mixed economic data.
The Dow Jones Industrial Average fell 2.39%, the Nasdaq dropped 2.75% and the S&P 500 declined 2.18%.
Oil prices reversed gains in the previous session as concerns grew that Iran could restart oil exports flooding the market in an already oversupplied market.
West Texas Intermediate crude plunged 5.1% to $29.66 per barrel and Brent slid 5.8% to $29.18 per barrel at 2100 GMT.
“Oil experienced a very turbulent start to 2016 and remains victim to a ceaseless theme of an aggressive oversupply in the markets, while rising concerns around slowing global growth have renewed fears that demand may be waning,” said FXTM research analyst Lukman Otunuga.
“A strengthening US dollar has added to oil’s woes, while investor attraction periodically diminishes as escalating tensions between Saudi Arabia and Iran thwart any remaining hopes of a production cut."
Meanwhile, US retail sales fell 0.1% in December, as expected, following a 0.4% increase in November, according to the Commerce Department. However, core retail sales fell 0.3% in December, missing forecasts for a 0.3% increase.
The US producer-price index fell 0.2% in December, the Labor Department said, in line with estimates. Excluding the volatile food and energy categories, core prices rose 0.1%, also as predicted.
US industrial production fell for the third straight month in December, according to data released by the Federal Reserve. Industrial output dropped a seasonally-adjusted 0.4% last month, steeper than the 0.2% slip economists had been expecting.
Manufacturing output, which makes up nearly three quarters of overall industrial output, fell 0.1% in December, worse than the zero growth predicted.
On more positive note for markets, consumer sentiment in the US rose a little more than expected this month, according to preliminary figures released by the University of Michigan. The index of consumer sentiment rose to 93.3 in January from 92.6 in December and compared with economists’ expectations for a reading of 93.
Federal Reserve policymaker William Dudley said the economic outlook had not changed since the central bank’s last policy meeting and that interest rates will continue to gradually rise.
Elsewhere, China entered a bear market as the Shanghai Composite Index closed down 3.5%, falling more than 20% from its December high, amid concerns about the volatility in the yuan. A bear market is when the price of an asset drops 20% from its peak. The index was also weighed down by a report that some banks in Shanghai have suspended the acceptance of shares from smaller listed companies as collateral for loans.
“Interventions by Chinese authorities are beginning to wane and lack effect as the cycle of capital outflows, weaker yuan and general volatility undermines investor confidence globally,” said Brenda Kelly, head of analysts at London Capital Group.
The People’s Bank of China also revealed that Chinese banks issued 597.8bn yuan of new loans in December, down from 708.9bn yuan in November and below the 700 billion yuan that was forecast.
The dollar rose against the pound, up 1.11%, but sank 0.49% and 0.88% against the euro and the yen respectively. Spot gold was up 0.92% to $1,088.26.
The 10-year Treasury yield fell 2.86% to 2.0278.
In company news, General Electric edged lower after it announced it has agreed to sell its appliance unit to Qingdao Haier.
Wells Fargo dropped as it said its fourth-quarter profit was flat as the bank continued to contend with a slump in oil prices.
Citigroup declined despite reporting a jump in fourth quarter profit as revenue rose but legal costs rose.
Major oil companies Chevron Corp. and Exxon Mobil Corp. were also under the cosh on the slump in oil.
S&P 500 - Risers
Wynn Resorts Ltd. (WYNN) $58.43 +13.46%
AbbVie Inc (ABBV) $57.34 +5.10%
General Growth Properties Inc. (GGP) $27.01 +4.69%
Chipotle Mexican Grill Inc. (CMG) $475.52 +4.67%
Freeport-McMoRan Inc (FCX) $4.34 +3.33%
Hasbro Inc (HAS) $72.11 +2.72%
Best Buy Co. Inc. (BBY) $27.10 +2.55%
Electronic Arts Inc. (EA) $66.06 +2.45%
Newmont Mining Corp. (NEM) $17.67 +2.35%
Advance Auto Parts (AAP) $144.26 +2.08%
S&P 500 - Fallers
Chubb Corp. (CB) $109.31 -14.10%
Williams Companies Inc. (WMB) $16.07 -12.14%
CONSOL Energy Inc. (CNX) $4.98 -11.39%
Marathon Oil Corp. (MRO) $8.14 -10.29%
Intel Corp. (INTC) $29.72 -9.22%
Rowan Companies plc (RDC) $12.20 -8.75%
Anadarko Petroleum Corp. (APC) $31.98 -8.64%
Micron Technology Inc. (MU) $11.07 -7.86%
Qorvo, Inc. (QRVO) $36.54 -7.31%
Murphy Oil Corp. (MUR) $17.14 -6.95%
Dow Jones I.A - Risers
Dow Jones I.A - Fallers
Intel Corp. (INTC) $29.72 -9.22%
E.I. du Pont de Nemours and Co. (DD) $54.06 -5.82%
Walt Disney Co. (DIS) $93.81 -5.35%
Cisco Systems Inc. (CSCO) $23.60 -4.30%
Microsoft Corp. (MSFT) $50.99 -3.99%
Caterpillar Inc. (CAT) $59.84 -3.90%
United Technologies Corp. (UTX) $85.64 -3.79%
Goldman Sachs Group Inc. (GS) $155.35 -3.74%
Boeing Co. (BA) $125.55 -2.83%
Visa Inc. (V) $71.81 -2.70%
Nasdaq 100 - Risers
Wynn Resorts Ltd. (WYNN) $58.43 +13.46%
Electronic Arts Inc. (EA) $66.06 +2.45%
Xilinx Inc. (XLNX) $42.81 +0.94%
CH Robinson Worldwide Inc (CHRW) $63.57 +0.70%
Bed Bath & Beyond Inc. (BBBY) $44.39 +0.36%
Intuitive Surgical Inc. (ISRG) $557.25 +0.27%
Henry Schein Inc. (HSIC) $146.66 +0.03%
Nasdaq 100 - Fallers
Intel Corp. (INTC) $29.72 -9.22%
Nxp Semiconductors Nv (NXPI) $68.65 -7.86%
Micron Technology Inc. (MU) $11.07 -7.86%
Sba Communications Corp. (SBAC) $91.96 -7.56%
Autodesk Inc. (ADSK) $49.40 -6.17%
Skyworks Solutions Inc. (SWKS) $60.67 -6.00%
Vimpelcom Ltd Ads (VIP) $2.99 -5.97%
Akamai Technologies Inc. (AKAM) $44.12 -5.95%
Lam Research Corp. (LRCX) $67.95 -5.56%
Nvidia Corp. (NVDA) $27.10 -5.48%