Wall Street Dragged Lower By Energy, Financials
Wall Street opened lower on Tuesday, with energy stocks falling on lower oil prices and financials hit by diminished prospects of an interest rate hike in the near term.
Oil prices were down more than 1 percent after a report from the International Energy Agency added to concerns about global oversupply. [O/R]
All 10 major S&P 500 sectors were lower, with the energy index’s 1.56 percent fall leading the decliners. The financial index was down 1.43 percent.
U.S. stocks had racked up their strongest gain in two months on Monday after Federal Reserve Board Governor Lael Brainard stuck to her dovish stance on interest rates and urged caution about removing monetary stimulus too quickly.
However, any sense of calm in markets looked fragile after three volatile trading days, especially on Friday, that saw bond yields soar and stocks rack up heavy losses on concerns that the Fed would raise interest rates at it Sept 20-21 meeting.
“The market is in a downward spiral and needs to complete the pullback it began last Friday,” said Peter Cardillo, chief market economist at First Standard Financial in New York.
“Falling oil prices and the election is also causing some uncertainty and traders are caught in the middle of a divided Fed.”
Futures traders cut the chances of a Fed rate hike at the central bank’s Sept 20-21 meeting to just 15 percent from 21 percent, according to the CME Group’s FedWatch tool.
Goldman Sachs also further cut its view on the likelihood of a rate hike next week, dropping it to just 25 percent from 40 percent after the final round of Fed speakers on Monday.
At 9:39 a.m. ET (1339 GMT) the Dow Jones Industrial Average was down 123.13 points, or 0.67 percent, at 18,201.94
The S&P 500 was down 15.4 points, or 0.71 percent, at 2,143.64 and the Nasdaq Composite was down 20.41 points, or 0.39 percent, at 5,191.48.
Even Apple’s 2.3 percent gain, after two U.S. carriers reported strong demand for the new iPhones, was not enough to pull up the indexes.
The stock was the only gainer on the Dow and chiefly responsible for the tech sector falling the least, 0.25 percent, among the 10 major S&P sectors.
Anadarko Petroleum was down 2.2 percent at $56.50 after it agreed to buy Freeport McMoRan’s Gulf of Mexico assets. Freeport was down 4.9 percent at $10.53.
Declining issues outnumbered advancing ones on the NYSE by 2,338 to 406. On the Nasdaq, 1,748 issues fell and 486 advanced.
The S&P 500 index showed no new 52-week highs and two new lows, while the Nasdaq recorded six new highs and nine new lows.