Stocks close mixed: S&P drops, Dow bumps up
Stocks closed mixed Tuesday as markets struggled from a one-two punch of falling oil prices and renewed fears of a global slowdown. A wait-and-see posture regarding Tuesday’s elections may also be holding back investors.
The Standard & Poor’s 500 index fell 5.71 points, or 0.3%, to 2012.10 and the Nasdaq composite index dropped 15.27 points, or 0.3%, to 4623.64. The Dow Jones industrial average moved up 17.60 points, or 0.1% to 17,383.84.
The sell-off in the U.S. oil pits picked up steam Tuesday, with a barrel of West Texas Intermediate crude dipping another 2%to $77.19, and at one point falling to $75.84, the lowest level since October 2011. It was trading at $100 a barrel as recently as July.
Oil prices slid following a decision by Saudi Arabia to cut prices of oil exported to the U.S., which is believed to be driven by the Saudi’s attempt to put pressure on the U.S. fracking industry.
Energy stocks took a hit, with ExxonMobil (XOM) falling 0.8% to $94.52 and Chevron (CVX) dropping 1.2% to $115.37. Noble is the worst performer since oil peaked this year. Shares in NE have fallen a brutal 44% for 2014.
“The stock market sell-off reflects a bearish bet among many investors that falling oil prices reflect weaker-than-expected global growth,” says Joe Quinlan, chief market strategist at U.S. Trust.
Stocks are likely reacting to the continued descent of crude, coupled with fresh signs that Europe’s economic growth continues to sputter. The European Commission cut both its growth and inflation forecasts for the eurozone for 2015 to 1.1% and 0.8%, respectively, according to Barclays. The downgraded outlook is the latest sign that Eurozone weakness could potentially weigh on U.S. growth.
Despite increased pressure on the European Central Bank to launch a U.S.-style government-bond buying program when it meets Thursday, Barclays said it does not “expect further easing.”
European markets closed lower as Britain’s FTSE index fell 0.5% to 6453.97 and Germany’s DAX index dropped 0.9% to 9166.47. The CAC 40 of France plunged 1.5% to 4130.19.
Asia stocks were decidedly mixed. Japan’s Nikkei shot up 2.7% to 16,862.47 while the Hang Seng of Hong Kong dropped 0.3% to 23,845.66.
In economic news, the U.S. trade deficit rose in September to its highest level since May as exports fell. The trade deficit widened to $43.0 billion in September, up from a revised $40.0 billion in August, the Commerce Department reported Tuesday.Economists had forecast a trade deficit of $40.0 billion for September.
The swelling trade deficit prompted economists to trim their growth forecasts in the U.S. for the fourth quarter.
Source: USA Today – Stocks close mixed: S&P drops, Dow bumps up
