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Global stocks in retreat as oil prices slip once again Global stocks in retreat as oil prices slip once again
(about 3 hours later)
U.S. stocks stumbled in early trading Monday as investors continue to worry about the health of the global economy amid falling oil prices. NEW YORK — U.S. stocks stumbled Monday as investors continue to worry about the health of the global economy amid falling oil prices.
The Dow Jones industrial average and the Standard & Poor’s 500-stock index were down about 2 percent. Investors seeking safety bought up government bonds, sending those yields down. (When there is high demand for bonds, their prices increase and yields, or interest rates, fall.) The Dow Jones industrial average and the Standard & Poor’s 500-stock index were down about 2 percent. The tech-heavy Nasdaq was seeing deeper losses, about 2.3 percent. Investors scrambling for safety bought up government bonds, sending those yields down. (When there is high demand for bonds, their prices increase and yields, or interest rates, fall.)
U.S. stocks are following European markets into negative territory, with media and technology sectors leading losses — picking up from a big tech sell-off Friday. The Euro Stoxx 50 and France’s CAC 40 were both down more than 2 percent. Many markets across Asia were closed for Lunar New Year holiday. This continues what has already been a tough year for investors. The Dow, a barometer of 30 blue-chip stocks, and S&P, a broader look at the market, are down 8.5 percent and 9.6 percent so far this year. The Nasdaq is taking even heavier losses, tumbling nearly 15 percent over the last month.
Investors have been concerned that falling oil prices may reflect a weakness in the global economy that the United States won’t be able to avoid. The price of WTI crude fell to about $29 a barrel on Monday and is down more than 50 percent over the past year. Tech investors are cashing in their profits, sending stocks such as Amazon, which had among the biggest market jumps last year, lower, analysts say. Amazon’s stock was down about 5 percent Monday, but has lost almost 30 percent of its value so far this year. (Amazon chief executive Jeffrey Bezos owns The Washington Post.)
Investors appear spooked by several factors, including that falling oil prices may reflect a weakness in the global economy that the United States won’t be able to avoid. The price of WTI crude fell to about $29 a barrel on Monday and is down more than 50 percent over the past year.
Consumers have been pocketing the savings from low fuel prices rather than spending it, and banks that bet big on oil companies are starting to feel the pinch. A slowdown in China’s economy could also curb fuel demand over the next few years, analysts have said.Consumers have been pocketing the savings from low fuel prices rather than spending it, and banks that bet big on oil companies are starting to feel the pinch. A slowdown in China’s economy could also curb fuel demand over the next few years, analysts have said.
The energy sector was hardest hit Monday, but banking stocks were also down significantly. Bank of America and Citigroup were down 5 percent and 4 percent respectively. Investors have also been skittish about the pace at which the Federal Reserve will raise key interest rates. If the Fed raises rates too quickly, it could hurt the pace of the country’s already weak economic recovery; if they do it too slowly, investors will fear that the economy is weaker than widely believed, analysts said. Investors may receive some clarity on that issue this week when Federal Reserve Chair Janet Yellen offers her semiannual testimony before Congress.
Investors have also been skittish about the pace at which the Federal Reserve will raise key interest rates. They may get some clarity on that issue this week when Federal Reserve Chair Janet Yellen offers her semiannual testimony before Congress. The energy sector was hardest hit Monday, but banking stocks were also down significantly. Bank of America and Citigroup were down 5 percent and 4 percent, respectively.
U.S. stocks have been sluggish all year. The Dow, a barometer of 30 blue-chip stocks, and S&P, a broader look at the market, are down 7 percent and 8 percent respectively in 2016. The tech-heavy Nasdaq is struggling the most, falling 12 percent so far this year. “We don’t really know how exposed banks are to potentially bad loans in the energy sector,” said Phil Orlando, chief equity market strategist for Federated Investors. So investors are taking out their fears on the entire financial sector, he said.