U.S. crude-oil prices declined 3.4% to $36.60 a barrel
as Saudi Arabia reiterated its commitment to keeping oil production
high and data showed an increase in U.S. crude supplies. A flood of crude has
helped drive oil prices lower for more than a year. Energy stocks led declines
in the S&P 500, falling 1.5%. The Brazilian real dropped 2.4% against
the dollar, the Norwegian kroner lost 0.8% against the greenback and the
Russian ruble fell 1.7% to hit its weakest level against the dollar in more
than a year. The Dow Jones Industrial Average slipped 117.11 points, or 0.7%,
to 17603.87. The S&P 500 fell 0.7% and the Nasdaq Composite lost 0.8%. Trading
volumes have been light this week. Financial markets in the U.S., Europe and
Japan will be closed Friday for the New Year’s holiday.
Wednesday’s action comes amid a lackluster month, and year,
for stocks. The S&P 500 has fallen 0.8% so far in December, and has gained
0.2% for the year. The index’s 2015 advance is on track to be its smallest
since 2011, when it ended little changed. That includes a bout of volatility in
the summer, when fears about a slowdown in Chinese growth prompted the first
correction in major U.S. indexes since 2011. A correction is defined as a drop
of at least 10% from a recent high.
Signs of weakness in oil prices have kept investors cautious
in recent sessions, said Brenda Kelly, head analyst at London
Capital Group. Lower commodity prices should be positive for growth and
consumer spending, but the fall may not simply reflect an excess supply of oil,
said Ms. Kelly.
U.S. crude prices have declined 31% this year. Stocks of oil
and gas companies have tumbled in tandem, dragging the S&P 500’s energy
sector down 24% in 2015. Ken Winans, president of Winans Investments, said he
sold his energy stocks over a year ago and hasn’t dipped back into the sector
yet as oil prices continue to decline.
Australia’s S&P/ASX 200 stock index rose 1% in its ninth
straight session of gains and Japan’s Nikkei Stock Average edged up 0.3%,
gaining for a third consecutive session. The Shanghai Composite added 0.3%, and
is on track to rise 10.5% this year, despite losing more than 40% of its
value over the summer. In other markets, gold fell 0.8% to $1,060.10 a troy
ounce. The yield on the 10-year Treasury note was little changed at 2.305%,
compared with 2.310% on Tuesday. Yields fall as prices rise.
Bank of America shares fell 1.3%. The bank said late
Tuesday it expects to post a pretax write-down of roughly $600 million in
the fourth quarter related to the redemption of $2 billion of trust preferred
securities. Billionaire Carl Icahn won a bidding war for Pep Boys -Manny,
Moe & Jack, striking a deal to buy the auto parts and repair chain for
about $1 billion. Shares in Pep Boys fell 2.9%.
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