Equities drop on energy weight; dollar climbs
Reuters
Published Dec 17, 2015 04:53PM ET
Equities drop on energy weight; dollar climbs
By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks led a decline in most equity markets around the globe on Thursday, a day after the Federal Reserve's first interest rate hike in nearly a decade, as continued pressure on oil weighed on the energy sector.
The long-expected but modest increase in the federal funds rate also boosted the dollar to a fresh two-week high against a basket of major currencies, while Wall Street snapped a three-day rally.
Economic data pointed to continued healing in the labor market, which could prompt more rate hikes from the Fed next year. However, the manufacturing sector continues to struggle, creating some nervousness among investors.
Brent and U.S. crude oil prices fell and remained near multi-year lows after fresh supply builds at the delivery point for U.S. crude futures added to worries about a global glut and strength in the dollar. Brent settled down 0.9 percent at $37.06 while U.S. crude settled down 1.6 percent at $34.95 a barrel.
The oil woes helped push U.S. equities lower after rallying on Wednesday, with the S&P energy index <.SPNY> down 2.5 percent as the worst performing of the 10 major S&P sectors.
"I think what we're going to see through the end of the year is a refocus on oil and commodities," said Karen Hiatt, senior portfolio manager at Allianz (DE:ALVG) Global Investors in San Francisco.
"The market is still continuing to want to migrate toward more defensive, more visible earnings-type companies or sectors."
Stocks in Europe gained, however, as investors overseas took the Fed hike as a sign of confidence in the world's largest economy.
The Dow Jones industrial average (DJI) fell 252.98 points, or 1.43 percent, to 17,496.11, the S&P 500 (SPX) lost 31.16 points, or 1.5 percent, to 2,041.91 and the Nasdaq Composite (IXIC) dropped 68.58 points, or 1.35 percent, to 5,002.55.
MSCI's all-country world index (MIWD00000PUS) lost 0.7 percent, even as the pan-European FTSEurofirst 300 (FTEU3) index jumped 1.3 percent to close at 1,434.48.
The dollar index (DXY), which measures the greenback against a basket of other major currencies, was up 1.3 percent at 99.158, on pace for its biggest percentage gain since Oct. 22. The euro
Moves in short-term U.S. Treasuries were modest, after touching 1.021 percent on Wednesday, a 5-1/2 year high, yields on two-year notes (US2YT=RR) were last at 0.9966 percent. However, yields on the benchmark 10-year Treasury notes (US10YT=RR) fell to 2.2322 percent, up 16/32 in price as investors turned their attention to timing of the next hike.
Another sustained rise in the dollar could put more pressure on commodities, by making them more expensive when measured in other currencies.
Get The News You Want
Copper CMCU3 lost 1.4 percent and is down nearly 28 percent for the year so far. Spot gold
(Additonal reporting by Marcus Howard; Editing by Meredith Mazzilli, Chizu Nomiyama and Chris Reese)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.