The US stocks dropped for a second consecutive session on Monday, led by another major decrease in the energy shares, as the prices of global oil fell nearly five percent amid growing concern ahead of corporate earnings season.
The prices of oil extended their recent free-fall following the cut in Goldman Sachs’ short-term price forecasts, while the Gulf producers showed no indications of curbing output.
The S&P energy index fell 2.8 percent, the largest drag on the S&P 500. Brent declined 5.3 percent to settle at USD 47.43 and US crude CLc1 tumbled 4.7 percent to USD 46.07.
Tim Ghriskey, chief investment officer of New York-based Solaris Group, said, “Crude oil is heading down again here. That’s sent us into negative territory again. There’s a lot of confusion and concern about the impact of oil prices.”
The profit forecasts for energy companies featuring at S&P 500 have sharply declined in the recent months, with fourth-quarter earnings for the energy sector now expected to have dropped 21.1 percent from a year ago, a news agency data showed. Meanwhile, the earnings for all of the S&P 500 are likely to have surged only 3.8 percent over the year-ago period.
“What everybody is concerned about is what managements are going to say about crude oil and about global economies,” Ghriskey said.
The Dow Jones industrial average dropped 96.53 points or 0.54 percent to 17,640.84. While the S&P 500 reported loss of 16.55 points or 0.81 percent to 2,028.26, the Nasdaq Composite declined 39.36 points or 0.84 percent to 4,664.71.
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