Dow briefly drops 250 points as US crude falls

66878e65c946f4fedec1a310b06ffb36

U.S. stocks traded lower Tuesday as renewed declines in oil prices weighed amid mixed reaction to some key earnings reports.

The Dow Jones industrial average fell more than 250 points in morning trade. Goldman Sachs and Chevron were the greatest weights on the index.

Shares of Exxon Mobil fell 2 percent in morning trade after the firm reported a 58 percent drop in profit, hurt by low oil prices. The world’s largest publicly traded oil company also said it would cut spending this year by one-quarter, Reuters reported.

U.S. crude oil futures were more than 5 percent lower in morning trade, falling below $30 a barrel. Concerns about demand and rising supply continued to weigh as hopes for a deal between OPEC and Russia on output cuts faded.

“The oil rally, which occurred around those rumors (about an output cut), has reversed and dragged down the stock market and long-term interest rates,” said David Kelly, chief global strategist at JPMorgan Funds.

Treasury yields held lower, with the 10-year yield falling below 1.9 percent to hit its lowest since April 2015. The 2-year yield was near 0.75 percent as of 9:52 a.m. ET.

The U.S. dollar held slightly lower against major world currencies, with the euro near $1.093 and the yen at 120.27 yen against the greenback.

Energy fell more than 2.5 percent in morning trade to lead all S&P 500 sectors lower. The index was off more than 1 percent in morning trade. The Nasdaq composite also declined more than 1 percent.

Alphabet, Google’s parent company, reported earnings after the close Monday that beat on both the top and bottom line, helped by a 17 percent rise in advertising revenue. A key advertising metric of aggregate paid clicks increased 31 percent from the previous year, beating consensus expectations of about 22 percent, according to StreetAccount.

A jump in the shares in after-hours trade and morning trade Tuesday put Google on pace to top Apple as the world’s most valuable company.

U.S. crude oil futures were more than 5 percent lower in morning trade, hovering just above $30 a barrel. Concerns about demand and rising supply continued to weigh as hopes for a deal between OPEC and Russia on output cuts faded.

“The oil rally, which occurred around those rumors (about an output cut), has reversed and dragged down the stock market and long-term interest rates,” said David Kelly, chief global strategist at JPMorgan Funds.

Treasury yields held lower, with the 10-year yield falling below 1.9 percent and the 2-year yield near 0.75 percent as of 9:40 a.m. ET.

The U.S. dollar held slightly lower against major world currencies, with the euro near $1.093 and the yen at 120.39 yen against the greenback.

Auto sales for January are the only major data out Tuesday, ahead of Friday’s jobs report.

Kansas City Fed President Esther George, voting member, is scheduled to speak on the economy at 1 p.m. ET.

In political news, Texas Senator Ted Cruz beat out national front-runner Donald Trump in the GOP’s Iowa caucuses, according to NBC News. Florida Senator Marco Rubio surprised many with a solid third place finish.

Democratic candidate Hillary Clinton appeared to have won the Iowa caucus after her rival, Vermont Sen. Bernie Sanders, dubbed it “a virtual tie.”

Kelly said the results could be neutral to slightly positive for markets. “The way votes came out last night seemed to focus on more centrist candidates on both sides,” he said.

In morning trade, the Dow Jones industrial average declined 233 points, or 1.42 percent, to 16,213, with Goldman Sachs leading all constituents except DuPont lower.

The S&P 500 fell 25 points, or 1.3 percent, to 1,914, with energy leading all 10 sectors lower.

The Nasdaq composite dropped 49 points, or 1.07 percent, to 4,571.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 21.

About eight stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 87 million and a composite volume of 269 million in morning trade.

Crude oil futures for March delivery fell $1.55 to $30.07 a barrel on the New York Mercantile Exchange. Gold futures for April delivery gained $2 to $1,130.00 an ounce.

On tap this week:

Tuesday

Earnings: Gilead Sciences, Yahoo, Chipotle Mexican Grill, Edwards Lifesciences

Monthly vehicle sales

1 p.m. Kansas City Fed President Esther George on the economy

Wednesday

Earnings: Comcast, General Motors, GlaxoSmithKline, Merck, Mondelez Intl., Novo Nordisk, Humana, Intl. Paper, MetLife, Allstate, AvalonBay, Boston Properties, GoPro, Lincoln Natl., NXP Semiconductor, Yum Brands

7 a.m.: Mortgage applications

8:15 a.m. ADP employment

9:45 a.m. Services PMI

10 a.m. ISM nonmanufacturing

10:30 a.m.: Oil inventories

Thursday

Earnings: AstraZeneca, ConocoPhillips, Philip Morris, Cigna, Clorox, Credit Suisse, Dunkin Brands, NY Times, Tempur Sealy, Hartford Fincl., LinkedIn, News Corp., Symantec, Decker’s Outdoor, DeVry Education, Lions Gate

7:30 a.m.: Challenger Job-Cut Report

8:30 a.m. Initial claims; productivity and costs

10 a.m. Factory orders

10:30 a.m.: Natural gas inventories

4:30 p.m.: Fed Balance Sheet/Money Supply

5 p.m. Cleveland Fed President Loretta Mester on economy, policy

Friday

Earnings: BNP Paribas, Nippon Telegraph, Estee Lauder, Toyota Motors, Tyson Foods, Moody’s, Weyerhaeuser, Aon, CME Group, Ametek

8:30 a.m. Employment report; international trade

1 p.m.: Oil rig count

3 p.m. Consumer credit, Treasury STRIPS

*Planner subject to change.

Evelyn Cheng

You may also like...