Wall Street drops for second day in a row

U.S. stocks tumbled to start 2016, falling to their lowest levels since mid-October, as a rout in Chinese equities renewed concern that an economic slowdown there will damp global growth. Photo / Bloomberg
U.S. stocks tumbled to start 2016, falling to their lowest levels since mid-October, as a rout in Chinese equities renewed concern that an economic slowdown there will damp global growth. Photo / Bloomberg

Wall Street moved lower for a second straight day in the new calendar year amid a decline in oil prices and concern about the global economic outlook.

In 1.04pm trading in New York, the Dow Jones Industrial Average declined 0.40 percent, while the Nasdaq Composite Index fell 0.39 percent. In 12.48pm trading, the Standard & Poor's 500 Index shed 0.31 percent.

READ MORE:
KiwiSaver members urged not to panic
New Zealand shares fall amid global stock rout
Global stocks tumble amid fears around China and tensions in the Middle East

Declines in shares of Walt Disney and those of American Express, last 2.5 percent and 2 percent weaker respectively, led the Dow lower. Shares of Wal-Mart Stores bucked the trend, trading 1.9 percent higher, for the largest percentage gain in the Dow.

Some are muted about the outlook for Wall Street this year.

"I see 2016 being a year of flat to declining US stocks because there are no catalysts to raise prices," Mohannad Aama, managing director, Beam Capital Management in New York, told Reuters.

"There will not be any major catalysts to warrant a recession and by extension deep declines, but we don't see any catalysts for the upside either."

While US car makers posted solid sales for the month of December, they fell short of expectations. Shares of General Motors last traded 2.8 percent lower, while those of Ford Motor last traded 2.9 percent weaker.

Even so, December's sales were strong enough to put 2015 industry sales on track for a fresh annual record, and remain optimistic about the outlook.

The US economy continues to expand and the most important factors that drive demand for new vehicles are in place, so we expect to see a second consecutive year of record industry sales in 2016.
Mustafa Mohatarem, GM's chief economist

"The single most important pieces are the ongoing gains in employment and the growth in personal income," Mohatarem noted. "When you add in lower energy prices, it's easy to see why consumer spending is strong."

Indeed, oil prices moved lower, declining about 2 percent, as concern about the global glut, and in particular overnight rising US stockpiles, pushed aside worries about increased tension between Saudi Arabia and its Gulf allies, and Iran. At least for now.

"The markets keep falling because globally, we're still oversupplied," Carl Larry, an analyst with Frost & Sullivan, told Reuters. "But, the Middle East tensions still have people scared and they're not sure if they should continue going in and selling. Prices could jump very quickly."

In Europe, the Stoxx 600 Index finished the session with a 0.6 percent increase from the previous close. Earlier in the day it had risen as much as 1.1 percent and dropped as much as 0.5 percent, according to Bloomberg.

Both France's CAC 40 Index and Germany's DAX Index rose 0.3 percent, while the UK's FTSE 100 Index added 0.7 percent.

Here commodity shares such as Glencore recovered, helping the overall market. Copper edged higher after Chinese authorities renewed efforts to shore up local stock markets.

"It's just buying the dip," John Plassard, senior equity-sales trader at Mirabaud Securities in Geneva, told Bloomberg. "There's a rebound in commodity companies. They were hammered so much yesterday that people are looking for opportunities."

- BusinessDesk

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2016, NZME. Publishing Limited

Assembled by: (static) on production apcf03 at 10 Dec 2016 05:14:47 Processing Time: 997ms