Dow
falls over 300 points as oil prices hit new lows
The
Dow Jones Industrial Average has lost over 300 points as crude oil
prices briefly dipped below $50 per barrel thrashing energy stocks on
Monday.
RT,
5
January, 2015
As
of 1:21 pm ET the Dow fell by 1.82 percent losing 323 points. The
Standard & Poor’s 500 Index followed close behind 1.55 percent
off losing over 36 points at 1:11 pm ET.
The
US stock markets fell as crude oil futures prices dropped to their
lowest since mid-2009 on the New York Mercantile Exchange (NYMEX) on
Monday.
West
Texas Intermediate (WTI) February futures fell by nearly 5 percent
briefly dipping below $50 a barrel. Brent crude hit its multi-year
low dropping at one point to $52.90 a barrel as it’s February
futures fell by over 6 percent.
“The
declines in oil are representing something much more ominous, which
is a global economic slowdown,” Jeff
Sica, president and CEO of advisory firm Circle Squared Alternative
Investments, told Bloomberg by phone. “Investors
have gone past the thought that this is good for the economy.”
Meanwhile
the US officials say they believe the drop in oil prices has so
far been beneficial for the American economy.
“I’m
always very hesitant to draw any conclusions or offer any analysis
about movements in the stock market,” White
House press secretary Josh Earnest said Monday afternoon during a
scheduled briefing with the media. “We’re
always monitoring the impact that any sort of policy area would have
on the economy, so it’s certainly something that we’re watching.
I think as a general matter, speaking broadly, the impact of falling
energy prices has been good for the US economy”
Earlier
on Monday, the European benchmark for Brent oil dropped to $54.72 a
barrel on the ICE Futures Europe exchange in London, Bloomberg
reported. February futures slid as much as 2.8 percent extending a
loss of 5.1 percent since last week.
By
the end of 2014 Brent futures fell by 48 percent over the year.
Monday’s opening session of the new year continued the
disappointing decline.
The
slumping oil prices come amid slackened global demand while supplies
still remain high.
"There's
no doubt that we have a combination of supplies hitting their zenith
at a time when demand is weakening,"
Phil Flynn, analyst at Price Futures Group in Chicago told Reuters.
Oil
production in Russia and Iraq surged to the highest level in decades.
The Iraqi Oil Ministry said on Sunday that it plans to increase crude
exports to a record in January. Russian oil production rose 0.7
percent in 2014 and averaged 10.58 million barrels a day, which set a
post-Soviet record.
The
euro was also hit on Monday tumbling to new lows against the dollar.
The currency fell to $1.1861, its weakest level since 2006 during
Asian trading hours, however picked up slightly to trade at $1.1950
during European ones.
Richard
Peterson, senior director at S&P Capital IQ told MarketWatch that
there will be volatility on the market for some time adding that he
remains optimistic in the long-term.
“Markets
are more on a pause than retreat as concerns over euro and oil have
taken over fundamentals for now,”
he said.” We
still expect 11% fourth-quarter earnings growth for the S&P 500
companies excluding energy sector, which will drive markets higher,”
Peterson added.
Stocks Suffer Worst Santa Claus "Rally" Since 1999 As Crude Plunges Below $50
5
January, 2015
Well
that really did escalate quickly...
The
market's internals triggered another Hindenburg
Omen (each
of the prior clusters worked and were saved by Fed speak)...
This
was the worst Santa Claus Rally (Sell-off) since 1999...
But
still up from pre-FOMC...
Europe
started the day ugly with German CPI and Grexit fears mounting
(trumping any hope/hype from Draghi for now)...
Leaving
US equities down hard on the day... (as a late day ramp failed
totally!)
The
Dow closed below its 50-day moving average (first time since the day
before FOMC)...
With
Energy worst on the day...
As
it catches down to oil prices and credit spreads...
As
a realization that maybe oil prices are on to something ripples thru
markets... perhaps
stocks can't handle this truth
Treasury
yields were crushed lower... with 10Y nearing 2.00% again (and 30Y
under 2.60%) - with
10Y and 30Y now below FOMC levels...
With
stocks catching down...
Stocks
caught down to credit's lack of exuberance...
The
US Dollar rose modestly despite signficant JPY strength though it did
fade throughout the US session...
Despite
modest USDollar strength, gold and silver also rose on the
day... (Gold
above $1200 and Silver over $16 again)
Charts:
Bloomberg
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