Stocks snap skid, end mostly higher

In­vestors fret as the price of crude oil falls to a 12-year low and China’s econ­omy con­tin­ues to strug­gle.

The Denver Post - - BUSINESS - By Alex Veiga

The U.S. stock mar­ket mounted a last-minute come­back to close slightly higher Mon­day, snap­ping a three-day los­ing streak.

The Stan­dard & Poor’s 500 in­dex and the Dow Jones in­dus­trial av­er­age each eked out a tiny gain, while the Nas­daq com­pos­ite ended slightly lower.

Con­sumer sta­ples were among the big­gest gain­ers. Oil and gas com­pa­nies were hit by an­other plunge in the price of crude oil, which tum­bled 5.3 per­cent to a 12-year low. Chevron lost 1.7 per­cent, and Exxon Mo­bil fell 1 per­cent.

The lat­est down­turn in oil comes at a time when in­vestors are in­creas­ingly un­easy about the tra­jec­tory of China’s econ­omy and the pos­si­ble im­pli­ca­tions for U.S. com­pany earn­ings. China’s Shang­hai com­pos­ite fell 5.3 per­cent Mon­day.

“In­vestors have one eye on China and all that’s go­ing on there and the other eye on oil,” said Erik David­son, chief in­vest­ment of­fi­cer at Wells Fargo Pri­vate Bank. “Those two things are keep­ing in­vestors on pins and nee­dles right now.”

The Dow added 52.12 points, or 0.32 per­cent, to close at 16,398.57. The S&P 500 rose 1.64 points, or 0.1 per­cent, to 1,923.67. The Nas­daq fell 5.64 points, or 0.1 per­cent, to 4,637.99.

All of the ma­jor stock in­dexes are down sharply for the year.

The three in­dexes hinted at a re­bound early Mon­day but spent much of the day in the red as in­vestors weighed the im­pli­ca­tions of an­other stock mar­ket drop in China and the slide in crude.

A weak­en­ing of China’s cur­rency and steep drops in its stock mar­ket have stoked wor­ries over the out­look for the world’s se­cond-largest econ­omy. That doesn’t bode well for the next round of com­pany earn­ings, which kicks into gear this week.

Many com­pa­nies’ quar­terly re­sults likely will re­flect the im­pact of China’s soft­en­ing econ­omy and lower oil prices, said Ja­son Pride, di­rec­tor of in­vest­ment strat­egy at Glen­mede.

“The No. 1 most-men­tioned item in thirdquar­ter re­ports was weak­ness in China,” Pride said. “We’d be sur­prised if China and oil are not cen­tral to the earn­ings nar­ra­tive as well.”

On Mon­day, Bench­mark U.S. crude dropped $1.75, or 5.3 per­cent, to $31.41 a bar­rel in New York. The last time it was lower was Dec. 5, 2003, when it closed at $30.73 a bar­rel. Brent crude, a bench­mark for in­ter­na­tional oils, fell $2, or 6 per­cent, to $31.55 a bar­rel in Lon­don.

In Asia, Chi­nese stocks sank again af­ter a re­bound Fri­day that an­a­lysts sug­gested was due to buy­ing from a group of state en­ti­ties dubbed the “Na­tional Team.” The Shang­hai Com­pos­ite In­dex fell 5.3 per­cent, and Hong Kong’s Hang Seng sank 2.8 per­cent. Syd­ney’s S&P/ASX 200 lost 1.2 per­cent, while Seoul’s Kospi fell 1.2 per­cent. Tokyo’s mar­kets were closed for a hol­i­day.

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