S&P 500 Extends 4-Day Losses, World Markets Struggle

Nichole Harper
14 Dec, 2015
New York City

S&P 500 index declined after the crude oil price dropped as much as 4% and neared 2011 low. European markets turned lower after positive start and struggled to hold the advance of the day. Asian markets also were cautious ahead of the Fed meeting.

[R]11:40 AM New York City, New York – S&P 500 index declined after the crude oil price dropped as much as 4% and neared 2011 low. European markets turned lower after positive start and struggled to hold the advance of the day. Asian markets also were cautious ahead of the Fed meeting.[/R]

Stocks were on the defensive in New York trading and investors looked ahead to the 2-day Fed policy meeting ending on Dec 16.

Stocks lacked direction and urgency and the negative bias persisted after crude oil price took another dive on the rising supply worries.

On Wall Street, Tollbooth Strategy Index edged down 6.27 to 10,742.14.

S&P 500 index slipped 9.99 or 0.5% to 2,002.42 and the Nasdaq Composite Index fell 26.37 or 0.5% to 4,907.10.

Crude oil in New York plunged 4% to $35.62 a barrel, first-time since 2009 and neared the financial crisis low of $34.20.

Gold dropped $5.42 to $1,069.35 an ounce.

U.S. Movers

Norfolk Southern Corp ((NSC)) rose 51 cents to $89.97 after the transportation services provider rejected a revised offer of $88.52 per share from Canadian Pacific Railway Ltd and deemed the price inadequate.

Earlier on November 17, Canadian Pacific offered for $94.94 per share.

Newell Rubbermaid Inc ((NWL)) plunged 8.5% or $3.85 to $41.44 after the consumer and commercial products maker said it would acquire its rival Jarden Corp for more than $15 billion in cash and stock to expand its business in food, beverage, baby products and kitchen appliances.

Under the terms, shareholders of Jarden will receive $21 in cash and 0.862 shares of Newell, representing 14% premium to Jarden''''s closing price of Friday.

The transaction is expected to close in the second-quarter of 2016.

Jarden Corporation stock jumped 4.9% to $55.25.

European Markets

After a strong start, European markets turned lower in the afternoon and slid in negative territory.

The fifth consecutive day of losses came amid concerns about declining oil prices, which overshadowed a stronger than expected industrial production report.

In London trading, Brent crude oil sank to $37.30 a barrel, down 8.5% in a week and 42.3% in the last six months and for the year so far has plunged 42%.

Industrial production in the euro zone increased more than expected after two months of declines.

In October, industrial production grew 0.6% in the euro zone and 0.5% in the EU28, compared with the previous month.

On an annual basis, industrial production in October rose 1.9% in the euro zone and 2.4% in the wider EU28 region, Eurostat reported.

In London trading, FTSE 100 index rose 29.52 or 0.5% to 5,968.23 and in Frankfurt the DAX index fell 91.23 or 0.9% to 10,243.75.

In Paris, CAC 40 index slid 14.48 or 0.3% to 4,535.08.

AstraZeneca Plc gained 0.2% to 4,337.50 pence after the pharmaceutical maker confirmed that it is in preliminary talks with Dutch cancer drug developer Acerta Pharma BV for £3.29 billion.

Veolia Environment VE SA increased 2.4% to €21.62 after the French waste and water treatment firm announced that dividend payments will increase in the next three years as a result of higher revenue and lower costs.

The utility company proposed a dividend of €0.73 per share for fiscal 2015, up from €0.70 a year ago. The dividend payout will climb by about 10% annually to 2018.

Veolia expects revenue to climb by 2% to 3% annually over the next three years and to reach more than €27 billion in 2018.

Recurring net income is forecast to exceed €800 million in 2018, compared with an estimate of €550 million for 2015.

Asian Markets

The Nikkei average fell to a six-week low and weakening backdrop in the commodities market overshadowed trading in stocks.

Crude oil dropped to a new seven-year low and traded in New York as low $35.52 a barrel and traders looked for the price to test $30 level.

Also, the rout in copper, iron ore and coal also deepened as the demand from the construction sector in China continued to soften.

Even the positive reading of Tankan business survey and the strategic agreement between India and Japan could not improve the faltering market sentiment.

Tankan business quarterly survey, a closely watched confidence index of the Bank of Japan, showed that confidence at big manufacturers remained at 12, unchanged in the fourth-quarter from the previous three-month period.

The large companies plan to raise capital spending by 10.8% in the fiscal year ending March 2016, slightly down from the previously expected increase of 10.9%.

Despite expanding investment plans, companies show caution about the demand for exports in the next quarter, according to the Bank of Japan survey.

The seasonally adjusted industrial production in October jumped 1.4%, compared to 1.1% increase in September, the Ministry of Economy, Trade and Industry said.

On an annual basis, industrial output fell 1.4% in October, compared with 0.8% drop in the prior month. It was third consecutive monthly decline.

The renminbi slipped to a four-year low against the U.S. dollar after the People’s Bank of China said it would measure the exchange rate against a broader basket of currencies.

In the trade-weighted basket, introduced late on Friday, the dollar accounts for 26.4% and the euro accounts for 21.4%.

The Nikkei 225 Stock Average declined 347.06 or 1.8% to 18,883.42 and the broader Topix index slumped 21.63 or 1.4% to 1,527.88.

The yen increased against the dollar to 121.22.

Stocks in Mumbai halted two week long decline and the latest read on wholesale price showed gathering momentum.

Stocks were under pressure after the deepening malaise in crude oil and widening correction in base metals, coal and iron ore prices overshadowed stocks across Asia.

The wholesale price index in November declined 1.99% compared to 3.81% fall in October and 0.17% decrease in the same period a year ago, the Ministry of Commerce & Industry reported.

The wholesale prices fell for the 13th month in a low since November 2013.

India and Japan signed a preliminary pact on civil nuclear cooperation after years of negotiations at the ninth annual summit between the two countries.

The two countries agreed on sharing technology, equipment and military information.

Japan will participate in large infrastructure projects in India, including the $5.5 billion Chennai-Bengaluru corridor project. Japan will provide $12 billion for constructing India’s first bullet train, as well as an incentive of $12 billion for Japanese companies investing in India.

India is looking to build its first bullet train between Mumbai and Amdavad and cut the travel time from seven hours to 2 hours for the distance of 508 km. The rail line is expected to cost ₹97,000 crore.

Rupee weakened 21 paisa to ₹67.09 against one U.S. dollar and descended to record low touched in 2013.

The Sensex Index edged up 105.92 or 0.4% to close at 25,150.35. The CNX Nifty increased 39.60 or 0.5% to 7,650.05.