Energy companies led a late-afternoon sell-off on Wall Street after U.S. crude oil prices had their biggest drop in more than three years and more in Tuesday’s stock market update. Investors are worried about the possibility of rising oil production out of the U.S. and OPEC.
The slide wiped out early gains for the market. Losses in health care companies and consumer goods stocks outweighed gains in banks and industrials.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 index fell 4 points, or 0.2 percent, to 2,722 at closing time.
The Dow Jones Industrial Average lost 99 points, or 0.4 percent, to 25,287, largely due to a loss in Boeing.
The Nasdaq composite remained steady at 7,200. The Russell 2000 index of smaller companies gave up 2 points, or 0.2 percent, to 1,516.
OIL SKID: U.S. crude oil had its biggest single-day drop since September 2015, notching its 12th consecutive decline. Benchmark U.S. crude plummeted 7.1 percent to settle at $55.69 a barrel in New York, the lowest level since December 2017. Brent crude, used to price international oils, dropped 6.6 percent to close at $65.47 a barrel in London.
Oil prices have been declining as the market adjusts to a drop in demand from emerging markets coupled with expectations for increased supply from the U.S. and OPEC.
“It’s very possible for oil to continue to shoot in either direction until you get that equilibrium,” said Tom Hainlin, global investment strategist at U.S. Bank Wealth Management.
President Donald Trump has been pressing Saudi Arabia and OPEC not to cut production. Saudi Arabia said this week that the oil cartel and allied crude producers will likely need to cut supplies, perhaps by as much as 1 million barrels of oil a day.
OPEC estimated that production hikes from Saudi Arabia, United Arab Emirates and Russia, have made up for more than twice the loss of production out of Iran, according to Ritterbusch and Associates, an oil trading advisory firm.
The firm expects that U.S. crude oil will continue to decline to about $55.25 a barrel.
Tuesday’s slide in oil prices weighed on energy sector stocks. Halliburton dropped 5.7 percent to $32.22.
TURBULENCE AHEAD: Boeing fell 2.5 percent to $348.12 following a Wall Street Journal report saying the aircraft manufacturer withheld information about potential hazards associated with an automated stall-prevention system on its 737 Max 8 aircraft like the Lion Air jet that crashed in Indonesia last month.
MIXED MEAL: Tyson Foods dropped 6.1 percent to $57.85 after the meat producer’s quarterly earnings beat analysts’ estimates, but revenue fell short. The company also issued a weak outlook, noting that it faced higher labor and freight costs.
BANK ON THIS: Financial sector stocks move higher a day after posting big losses. Synchrony Financial added 1.7 percent to $27.68.
REVVED UP: Advance Auto Parts vaulted 10.5 percent to $184.62 after the retailer reported strong quarterly results and raised its forecast.
ASSET SALE: General Electric jumped 6.9 percent to $8.55 after disclosing that it will sell up to a 20 percent stake in Baker Hughes. GE, which has been struggling with sagging profits, aims to raise about $4 billion in cash from the sale.
BUY AND BUILD: D.R. Horton rose 2.2 percent to $34.65 after the homebuilder agreed to buy Westport Homes, which builds homes in Indiana and Ohio.
US-CHINA TRADE: The South China Morning Post reported Chinese President Xi Jinping’s top economic adviser might visit Washington ahead of Xi’s planned meeting with President Donald Trump. The newspaper, citing unidentified sources, said the visit is aimed at easing trade tensions but no schedule had been decided. The two sides have raised tariffs on billions of dollars of each other’s goods in a dispute over U.S. complaints about Beijing’s technology policy. Xi and Trump are due to meet during this month’s Group of 20 gathering of major economies in Argentina.
THE QUOTE: “There is some good optimism that there is progress on trade at the G-20 meeting later this month,” said Craig Birk, chief investment officer at Personal Capital.
YIELDS: Bond prices rose. The yield on the 10-year Treasury note fell to 3.14 percent from 3.19 percent late Friday. Bond trading was closed Monday for Veterans Day.
METALS: The price of gold slipped 0.2 percent to $1,201.40 an ounce. Silver also lost 0.2 percent to $13.98 an ounce. Copper rose 0.4 percent to $2.69 a pound.
CURRENCIES: The dollar held steady versus the yen at 113.86 yen. The euro strengthened to $1.1268 from $1.1240.
OVERSEAS STOCK MARKET UPDATE: European markets rose. Germany’s DAX gained 1.3 percent, while France’s CAC 40 added 0.9 percent. London’s FTSE 100 was flat. In Asia, Tokyo’s Nikkei 225 fell 2 percent. Sydney’s S&P-ASX 200 declined 1.8 percent. Hong Kong’s Hang Seng gained 0.5 percent. Seoul’s Kospi gave up 0.4 percent and India’s Sensex added 0.4 percent.
Keep scrolling down to see how Tuesday stacks up with the previous five days on Money & Markets.
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