Tags: stocks | market | rout | oil

Stocks Sink With Markets Around the World as Rout Deepens

Wednesday, 20 Jan 2016 04:41 PM

U.S. stocks fell, with the Standard & Poor’s 500 Index reaching at 21-month low, following a renewed selloff across stocks worldwide as skepticism about the strength of the global economy intensified.

Equities staged a late-day rally paced by health-care and small-cap shares that briefly erased a drop of 3.7 percent in the Nasdaq Composite Index. The Dow Jones Industrial Average and S&P 500 cut their worst losses by more than half. Energy companies sank further into five-year lows, on pace for their worst monthly slump since 2008 as oil plunged. Chevron Corp. slid 3.1 percent. International Business Machines Corp. fell 4.9 percent after its earnings forecast missed projections.

The Standard & Poor’s 500 Index fell 1.2 percent to 1,859.43 at 4 p.m. in New York, closing at its lowest level since April 2014. The gauge trimmed a slide of more than 3.6 percent.

“We were oversold and we didn’t keep falling off the table,” said Walter “Bucky” Hellwig, who helps manage $17 billion as a senior vice president at BB&T Wealth Management in Birmingham, Alabama.. “The last-hour strength is positive and I think it’s due to the fact that investors are saying, ‘This thing is oversold, I’m going to put some money to work,’ and it’s worked out better than buying it on the up days and then watching it disappear.”

Global equities’ worst-ever start to a year deepened as oil continued its collapse and a slowdown in China weighs on sentiment. Japanese shares joined benchmark indexes in China and Europe in tumbling into a bear market today. West Texas Intermediate crude futures slumped 6.7 percent to near $26 a barrel.

“What the market is focused on is Chinese hard-landing fear, oil prices and the strength in the dollar,” said Phil Orlando, who helps oversee $360 billion as chief equity-market strategist at Federated Investors Inc. in New York. “We haven’t hit bottom yet. That’s when we start talking about the need to retest the summer lows and holding at that level to take us to long-term support.”

About $2.2 trillion has been wiped off the value of U.S. stocks this year through yesterday, with the S&P 500 down 8 percent. And any rallies are getting shakier: nerves are weakening in a market where everything from China to oil and the Federal Reserve are proving capable of knocking equities down at any time. It’s a reversal of the optimism that underpinned the last three years of the bull market, when traders viewed bad news as transitory and used declines as opportunities to buy the dip.

The S&P 500’s plunge triggered a technical signal that indicates it’s oversold. The gauge’s relative strength index, which measures whether gains or losses have been too fast to sustain, dipped to 30, a threshold that indicates a rebound may materialize. The RSI last fell below 30 on Jan. 13. The prior time it was that low was on Aug. 25, when the S&P 500 hit a bottom and rallied 6.5 percent over the next three days.

The main U.S. equity benchmark was nearly 13 percent below its all-time high set in May, after rallying to within 1 percent of the record as recently as Nov. 3. The S&P 500 trades at 14.9 times the forecast earnings of its members, in line with the index’s average of the past five years. It’s more expensive than developed markets in Europe, where the Stoxx 600 Index trades for 13.6 times estimated earnings.

Investors are keeping close watch on progress in the economy to gauge the potential pace of future interest-rate increases by the Federal Reserve. The central bank’s next policy meeting concludes a week from today.

Data Watch

Data today showed the cost of living in the U.S. dropped in December, led by a slump in commodities that’s roiling global markets. Excluding food and fuel, the so-called core index rose less than forecast with the smallest gain in four months. A separate report showed new-home construction unexpectedly fell in December, indicating the industry lost some momentum entering 2016. Permits, a proxy for future construction, also fell on a decline in applications for multifamily projects.

Concerns about weaker growth are overshadowing the corporate earnings season, where most of the few companies that have reported so far have exceeded estimates. Verizon Communications Inc., General Electric Co. and Starbucks Corp. are among S&P companies scheduled to release financial results this week. Analysts predict profits slumped 7 percent in the final three months of 2015, while sales fell 3.1 percent.

“A few people are calling this a good buying opportunity, but nobody seems willing to really stick their neck out,” said Ross Yarrow, director of U.S. equities at Robert W. Baird & Co. in London. “All the concerns go back to China and oil. We’re already seeing a big impact in the lack of trade across the world. There isn’t much out there that can really support a lasting rally.”


© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
Headline
U.S. stocks fell, with the Standard & Poor's 500 Index reaching at 21-month low, following a renewed selloff across stocks worldwide as skepticism about the strength of the global economy intensified.
stocks, market, rout, oil
817
2016-41-20
Wednesday, 20 Jan 2016 04:41 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved