S&P 500 Down 2.2% on Global Sell Off

Nichole Harper
04 Jan, 2016
New York City

U.S. stock markets opened sharply lower due to on the growing evidence of slowdown in China, escalating tension in the Middle East, and volatile oil prices. Tesla Motors fell 7% after the automaker met the low end of its revised unit sales forecast in the fourth quarter.

10:55 AM New York City, New York - U.S. stock markets opened sharply lower due to on the growing evidence of slowdown in China, escalating tension in the Middle East, and volatile oil prices. Tesla Motors fell 7% after the automaker met the low end of its revised unit sales forecast in the fourth quarter. Baxalta is in talks to be acquired by its rival Shire PLC.

U.S. stock indexes tumbled 2% at the opening on Monday after surveys showed weakness in manufacturing sector deepened and central bank effectively devalued yuan to a 4-year low.

U.S. construction spending declined for the first time nearly 18 months in November after rising residential investment failed to offset a drop in non-residential outlays.

Separately, a private survey showed more headwinds for the manufacturing sector.

The Institute for Supply Management said its measure of manufacturing activities declined to 48.2 in December from 48.6 in November on the weakness in energy sector and rising dollar also dented exports and made imported goods cheaper.

Dow Jones Industrial Average fell 381 points, or 2.2%, to 17,044.30, while the S&P 500 lost 44.3 points, or 2.2%, to 1,999.47.

The Nasdaq 100 index dropped 97 points, or 2.1%, to 4,493.

Stock markets in Europe declined sharply as well with DAX 30 index led the region with a loss of 4%. Benchmark indexes in France and the U.K. declined more than 2.4%.

Gold prices jumped more than 1.5% and crude oil gained 1.6% after tensions rose in the Middle East and rift between Iran and Saudi Arabia widened along the religious lines as more Sunni nations supported Saudi for its executions including a Shite cleric.

Volatile Oil on Rising Middle East Tensions

Tension between Saudi Arabia and Iran raised concerns about further oil-price related turmoil. During the weekend, Saudi Arabia severed ties with Iran, following attacks on its embassy in Tehran by protestors against the execution of Shiite Muslim cleric Nemer al-Nemer.

Saudi Arabia executed 47 people on Saturday on terrorism charges.

Brent crude prices initially spiked almost 3% but later retreated to around $37 a barrel.

Before Halt, Shanghai Plunges 7%

The China Shanghai Composite Index dropped 6.7% due to disappointing manufacturing data, while the Shenzhen Composite lost more than 8%.

China''s manufacturing contracted for the 10th straight month in December, and the decline accelerated, according to a private survey data released on Monday.

Trading was suspended 90 minutes before the market close. The trading halt is part of a new circuit breaker system, established to prevent the large swings that accelerated last year.

U.S. Movers

Tesla Motors Inc tumbled 7.6% to $221 after the electric car maker released delivery numbers for the fourth quarter during the weekend.

The company met the low end of its revised guidance, delivering 50,580 vehicles for the year and 17,400 in the fourth quarter.

Baxalta Inc, the pharmaceutical company, jumped 3.3% to $40.22 on reports that Ireland-based Shire PLC is close to completing a takeover of its U.S. rival.

Netflix Inc fell 6.1% to $107.4 on profit taking and increasing competition from studios, networks, and other tech companies and a broker downgrade.

Netflix was among the best-performing stocks last year and jumped more than 122% in 2015.