Dow falls 100 points; energy weighs as oil slides
U.S. stocks traded lower Monday, kicking off the last week of trade for the year, as a renewed slide in oil prices weighed. (Tweet This)
Energy fell more than 1.5 percent to lead all S&P 500 sectors lower in morning trade, taking the S&P back into negative territory for the year so far in intraday trade. Chevron (CVX) and Exxon Mobil (XOM) were among the greatest weights on the Dow Jones industrial average. The index briefly fell more than 100 points in mid-morning trade.
“Obviously it’s all about oil. We’re basically on holiday volume and the gyrations can be exaggerated due to lighter volume,” said Peter Cardillo, chief market economist at First Standard Financial.
Oil traded more than 3 percent lower, with both WTI and Brent below $37 a barrel as of 10:29 a.m., ET. U.S. crude struggled to hold a slight premium to the internationally traded Brent.
WTI gained 9 percent last week, helping U.S. stocks post their best week of the month so far. However, WTI is on track for its second-straight monthly decline and its second consecutive annual loss since the years 1997 to 1998.
“With not much data driving the market, maybe some year-end cleaning up of portfolios. … I’m not overly concerned. This (decline) is really oil,” said Chris Gaffney, president, Everbank World Markets.
“I think demand’s still going to be there. While we’ve got OPEC pumping as fast as they can, I feel like we’re nearing a bottom but it’s still tough to call it,” he said. He expects higher oil prices next year.
activity increased for a third month in a row in December to 13.4. However, the the index of future general business activity turned negative in December.
Treasury yields traded mixed, with the 10-year yield (US10Y) lower near 2.22 percent and the 2-year yield (US2Y) higher around 1.02 percent.
The U.S. dollar traded mildly lower against major world currencies, with the euro near $1.098 and the yen at 120.27 yen against the greenback in mid-morning trade.
European stocks traded lower. London’s FTSE index was closed for a U.K. public holiday. Asian equities closed mostly lower, with the Shanghai composite posting its worst day since Nov. 27. The Shanghai composite is still on pace for its first two-year win streak since 2007.
The last trading week of the year is historically positive for stocks — the so-called Santa Claus rally.
Jeffrey A. Hirsch of the Stock Trader’s Almanac said in a note that the seven-day trading day period between the open of Dec. 24 and the close of trade on Jan. 5 usually sees an average 1.5 percent return for the S&P 500.
“The failure of stocks to rally during this time tends to precede bear markets or times when stocks could be purchased at lower prices later in the year,” he said.
In morning trade, the Dow Jones industrial average (.DJI) declined 93 points, or 0.53 percent, to 17,459, with Chevron the greatest decliner and Walt Disney (DIS) leading a handful of advancers.
The S&P 500 (.SPX) traded down 14 points, or 0.67 percent, to 2,047, with energy leading all 10 sectors lower.
The Nasdaq (.IXIC) composite declined 36 points, or 0.71 percent, to 5,012.
About 11 stocks declined for every three advancers on the New York Stock Exchange, with an exchange volume of 110 million and a composite volume of 426 million as of 10:24 a.m.
Crude oil futures for February delivery fell $1.18 to $36.92 a barrel on the New York Mercantile Exchange. Gold futures for February delivery fell $4.70 to $1,071.20 an ounce in morning trade.
On tap this week:
1:00 p.m. 2-year Treasury note auction
8:30 a.m.: International trade in goods
9:00 a.m. S&P/Case Shiller home prices
10:00 a.m. Consumer confidence
1:00 p.m. 5-year Treasury note auction
7:00 a.m.: Mortgage applications
10:00 a.m. Pending home sales
10:30 a.m.: Oil inventories
1:00 p.m. 7-year Treasury note auction
3:00 p.m.: Farm prices
8:30 a.m. Initial claims
9:45 a.m. Chicago PM
10:30 a.m.: Natural gas inventories
4:30 p.m.: Fed balance sheet
*Planner subject to change.