Oil drop, China data drag Wall Street lower

Reuters Updated - January 20, 2018 at 02:56 AM.

US stocks ended near the lows of the day on Tuesday as energy shares tumbled alongside the price of oil and soft Chinese trade data rekindled fears that the global economy is weaker than anticipated.

US crude futures fell more than 4 per cent in post-settlement trading, in their largest daily decline since bottoming so far for the year on February 11. Since that low, the US barrel of crude rose as much as 45.5 per cent.

Despite the rebound in crude prices, oversupply and expectations of weak demand from China have weighed on investor sentiment. The price of oil and equity indexes have been strongly correlated this year.

"While I'd love to see oil break out, I don't think it will happen yet," said Uri Landesman, president at Platinum Partners in New York.

Goldman Sachs analysts said the recent rally in oil was premature as prices would need to remain lower for longer to help rebalance the market later in the year.

Shares of Dow components Exxon and Chevron fell more than 2 per cent. The S&P 500 energy index dropped 4.1 per cent.

China's February trade performance was far worse than economists had expected, with exports tumbling the most in more than six years. The 16th-straight monthly decline in imports weighed on stocks in the basic materials sector, which was down 2 per cent.

Landesman said the S&P 500 is still in a downward trend and will likely stall near the 2,000 level, heading toward support near 1,825 before testing the record set last May above 2,100. The index on Monday closed above 2,000 for the first time since January 5.

"It will be trading in that channel based on slow global (economic) growth prospects," Landesman said.

The Dow Jones industrial average fell 109.85 points, or 0.64 per cent, to 16,964.1, the S&P 500 lost 22.5 points, or 1.12 per cent, to 1,979.26 and the Nasdaq Composite dropped 59.43 points, or 1.26 per cent, to 4,648.83.

The largest percentage decliner on the Nasdaq 100 was Micron , down 7.9 per cent to $10.66.

Shake Shack tumbled 11.8 per cent, falling to $37.23 after the burger chain issued disappointing results and forecast.

Shares of Urban Outfitters were up 16.1 per cent at $32.69, after better-than-expected sales for its Free People brand.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 3.2-to-1 and on the Nasdaq a 3.5-to-1 ratio favored decliners.

The S&P 500 posted 18 new 52-week highs and 1 new low; the Nasdaq recorded 36 new highs and 37 new lows.

About 8.5 billion shares changed hands in U.S. exchanges, below the 8.77 billion average over the last 20 sessions.

Published on March 9, 2016 03:00