U.S. stocks slide on oil volatil­ity

2016’s rocky start re­flects mount­ing wor­ries on Wall Street about a slow­down in the global econ­omy.

The Denver Post - - BUSINESS - By Alex Veiga

It has been a tur­bu­lent ride for stock mar­ket in­vestors this year — and it got worse Wed­nes­day.

A broad down­turn in U.S. stocks on an­other volatile day for crude oil prices knocked the Stan­dard & Poor’s 500 in­dex down 10 per­cent from its Novem­ber peak.

That’s known as a cor­rec­tion on Wall Street, and it’s the se­cond time in less than five months for the S&P 500 in­dex, which is re­garded as the bell­wether for the stock mar­ket.

The Dow Jones in­dus­trial av­er­age also tum­bled, los­ing more than 360 points be­fore clos­ing within 25 points of its own cor­rec­tion level.

The rocky start to the year re­flects mount­ing wor­ries on Wall Street about a slow­down in the global econ­omy, plung­ing oil prices and the im­pli­ca­tions for U.S. com­pa­nies. It also deep­ens the pain for many in­vestors af­ter a flat year of re­turns for the stock mar­ket in 2015.

The S&P 500 in­dex is now down 7.5 per­cent this year, while the Dow is off 7.3 per­cent. The Nas­daq is deeper in the red, down 9.6 per­cent. The Rus­sell 2000, which con­sists of small-com­pany stocks, is now down 20 per­cent from its June peak. Such a big plunge is de­fined as a bear mar­ket.

“At the very core of this, there’s a bull­bear de­bate,” said Quincy Krosby, mar­ket strate­gist at Pru­den­tial Fi­nan­cial. “Whether or not we’re headed into a re­ces­sion. That’s the de­bate. Are we gain­ing the mo­men­tum in the econ­omy to jus­tify the val­u­a­tion in the mar­ket?”

En­ergy and con­sumer stocks bore the brunt of the sell­ing Wed­nes­day. The price of U.S. crude oil closed slightly higher but re­mains near $30 a bar­rel, a level that in­vestors fear could force many oil and gas com­pany to go bank­rupt. Brent crude, the in­ter­na­tional stan­dard, fell 2 per­cent.

Some of the big­gest win­ners from last year,

STOCK WATCH: CSX such as Netflix and Ama­zon, both of which dou­bled in value in 2015, also fell sharply.

“The mo­men­tum names that drove this mar­ket higher have just been clob­bered,” Krosby said.

All told, the Dow lost 364.81 points, or 2.21 per­cent, to 16,151.41.

The S&P 500 in­dex fell 48.40 points, or 2.5 per­cent, to 1,890.28. It was the worst day for the in­dex since Sept. 28.

The Nas­daq slid 159.85 points, or 3.4 per­cent, to 4,526.06.

All the sec­tors in the S&P 500 in­dex ended sharply lower, with con­sumer dis­cre­tionary stocks far­ing the worst, down 3.4 per­cent. Biotech­nol­ogy stocks also took a drub­bing. The Nas­daq Biotech­nol­ogy in­dex lost 5.3 per­cent and is down 17.2 per­cent this year.

The mar­ket was com­ing off its best day this year and ap­peared to be headed for more gains early in the day. The trend didn’t hold for long, how­ever, as oil prices be­gan to swoon fol­low­ing a re­port show­ing that de­mand for fu­els slipped last week. In­vestors also re­acted to dis­cour­ag­ing earn­ings out­looks from Ford Mo­tor and auto parts sup­plier BorgWarner. Ford fell 65 cents, or 5.1 per­cent, to $12.20. BorgWarner lost $3.56, or 9.5 per­cent, to $33.84.

Bench­mark U.S. crude edged up 4 cents to close at $30.48 a bar­rel in New York. U.S. crude is down 18 per­cent so far this year. Brent crude, a bench­mark for in­ter­na­tional oils, fell 57 cents, or 1.8 per­cent, to $30.31 a bar­rel in Lon­don.

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