Never hasWall Street had aworse start to a year

The alarm over a slow­down in China and plung­ing oil prices trip the global econ­omy at the start­ing line.

The Denver Post - - BUSINESS - By Alex Veiga

The stock mar­ket capped the first two weeks of 2016 with a steep slide Fri­day that sent the Dow Jones in­dus­trial av­er­age down nearly 400 points.

All three ma­jor stock in­dexes — the Dow, the Nas­daq Com­pos­ite in­dex and the Stan­dard & Poor’s 500 — are now­in­what’s known as a cor­rec­tion, or a drop of 10 per­cent or more from their re­cent peaks.

The­mar­ket has been on a stom­ach- churn­ing ride since the start of the year.

It’s been wrenched up, but mostly down, be­cause of alarm over a slow­down in China and the plung­ing price of oil to its low­est level in 12 years. In­vestors are see­ing dam­age to U. S. cor­po­rate prof­its, par­tic­u­larly at en­ergy com­pa­nies.

The Dow slid 390.97 points, or 2.39 per­cent, to 15,988.08 points. The av­er­age had been down more than 500 points early in the af­ter­noon.

The S& P500 ended down 41.51 points, or 2.2 per­cent, at 1,880.33. The Nas­daq dropped 126.59 points, or 2.7 per­cent, to 4,488.42.

The Dow and S& P 500 have now­fallen about 8 per­cent this year, while the Nas­daq is off about 10 per­cent.

“Oil is the root cause of to­day,” said Dan Far­ley, re­gional in­vest­ment strate­gist at the Pri­vate Client Re­serve at U. S. Bank. “Peo­ple are un­cer­tain, and when they’re un­cer­tain they’re scared.”

Crude oil has dropped below $ 30 a bar­rel from a high of over $ 100 dur­ing the sum­mer of 2014, evis­cer­at­ing en­ergy com­pany prof­its.

Bench­mark U. S. crude fell $ 1.78, or 5.7 per­cent, to $ 29.42 a bar­rel in­NewYork. Brent crude, a bench­mark for in­ter­na­tional oils, fell $ 1.94, or 6.3 per­cent, to $ 28.94 a bar­rel in Lon­don.

On Fri­day, Wil­liams Cos. led a slide among oil, gas and min­ing com­pa­nies, fall­ing $ 2.19, or 12 per­cent, to $ 16.10.

In­vestors also got some dis­cour­ag­ing eco­nomic news Fri­day: The Fed­eral Re­serve saidU. S. in­dus­trial pro­duc­tion, which in­cludes man­u­fac­tur­ing, min­ing and util­i­ties, dropped in De­cem­ber for the third­month in a row. And an­other govern­ment re­port in­di­cated U. S. retail sales dipped last month.

Many in­vestors had wel­comed the new year with fairly high hopes. They ex­pected oil prices would sta­bi­lize.

Af­ter a mar­ket cor­rec­tion in Au­gust, few fore­casted it would hap­pen again so soon. And the Fed­eral Re­serve’s move in De­cem­ber to raise in­ter­est rates for the first time in nearly 10 years sig­naled to many that the U. S. econ­omy was healthy.

“The hope was global growth­would sta­bi­lize, and early in 2016 here, that has been a dis­ap­point­ment, too,” said David Chalup­nik, head of eq­ui­ties at Nu­veen As­set Man­age­ment.

De­spite the rough start to the year, Wall Street­watch­ers are not ready to say that the bull mar­ket is over.

“We don’t be­lieve we’re go­ing into a bear mar­ket,” Chalup­nik said. “The rea­son for that is theU. S. econ­omy is sound.”

In China, the Shang­hai Com­pos­ite In­dex slid 3.6 per­cent to its low­est close in 13 months.

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