Wall St. Ends Down for the Fourth Day on Global Growth Worries
The US experienced a major stock fall on Wednesday, caused mainly due to a World Bank forecast concerning global economic weakness and copper prices downfall. However, a late-day rebound in energy shares left the market well off its lows after a volatile session.
.SPNY, the S&P energy index ended up 0.1 percent after falling 2.6 percent. It rebounded later as oil prices CLc1 LCOc1 moved up considerably (highest in the last two years, much ahead of options expiration). On the other hand, despite the day’s jump, crude oil prices remained near six-year lows.
The day’s worst performers were S&P 500 materials.SPLRCMA and financial.SPSY sectors, falling more than 1 percent.
The price of a key industrial metal, copper CMCU3, declined lowest in the last five and a half years This slowdown in price has weighed down the shares of producers such as Freeport McMoRan Inc, following the World Bank’s stoppage of economic growth forecasts for this year and the next.
U.S. retail sales have also registered their biggest plunge in 11 months in December, adding to the investor concerns. The S&P retail index, .SPXRT experienced a fall of 0.8 percent.
“You look at the obliteration in oil, copper … there are a lot of questions about worldwide demand and growth,” commented Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. Expressing his fear he said, “With an earnings season just getting started, there’s a lot of nervousness, given we’ve had six years of up markets. Are we due for a down market?”
The Dow Jones industrial average.DJI dipped 186.59 points, or 1.06 percent, to 17,427.09. The S&P 500.SPX fell 11.76 points, or 0.58 percent, to 2,011.27 and the Nasdaq Composite.IXIC lost 22.18 points, or 0.48 percent, to 4,639.32.
U.S. crude oil CLc1 moved upward at 5.6 percent, while Brent LCOc1 ended up at 4.5 percent, snapping a four-day fall.
The S&P 500 reached its 120-day moving average (understood as a technical support level) and hit a new low for the year at 1,988.44. S&P e-minis ESc1 also broke support and stopped at an intraday low for the year. The S&P 500 is now 3.8 percent below the record high which was reached on Dec. 29, 2014.
Copper producer Freeport McMoRan’s (FCX.N) shares fall for a second day. Shares stopped down at a meager 10.9 percent at $18.74. The stock was the S&P 500’s biggest percentage decliner.
In recent months the expectations for U.S. fourth-quarter earnings have fallen drastically, with growth now estimated at just 3.6 percent compared to the Oct. 1 estimate for 11.2 percent, in accordance with Thomson Reuters data.
JPMorgan Chase & Co (JPM.N), the biggest U.S. bank by assets, declined at 3.5 percent at $56.81 after announcing a 6.6 percent drop in quarterly profit. After posting quarterly results Wells Fargo & Co (WFC.N) lost 1.2 percent to $51.25.
A large trade in the options on the S&P 500’s tracking ETF (SPY.P) recommended a suitable positioning for a further decline in the market, supposed to be within the next week and a half. A trader paid $1.23 a contract for 43,830 SPY puts at the $195 strike price, which corresponds to the 1,950 level on the S&P 500.
Advancing issues have superseded the declining ones on the NYSE by 1,856 to 1,238, for a 1.50-to-1 ratio on the downside; while on the Nasdaq, 1,743 issues fell and 994 moved up for a 1.75-to-1 ratio favoring decliners.
The benchmark S&P 500 index proclaimed 13 new 52-week highs and 29 new lows. The Nasdaq Composite recorded 39 new highs and 130 new lows simultaneously.
According to data from BATS Global Markets, about 8.1 billion shares changed hands on U.S. exchanges as compared to 7.1 billion average for the last five sessions.