Wall Street saw a second day of selling after Wednesday´s Fed decision to raise rates, on far higher than usual trading volumes amid the quarterly expiry of futures and options tied to stock indices and individual shares, an event known as “quadruple witching” in market parlance.
Stocks dropped immediately lower coming out of the gate, with little in terms of fresh economic news and with most traders making sure their books were squared going into the typically extremely quiet holiday season.
The Dow Jones Industrials fell 2.10% or 367 points to 17,129, while the S&P 500 and Nasdaq Composite were down by 36 and 80 points each to 2,006 and 4,923, respectively – with all three market gauges closing at their respective session lows.
Pipelines (-3.69%), Furninshings (-3.26%), Trucking (-3.19%) and Real estate services (-3.17%) were the worst performing industrial groups.
Oil futures may come under further pressure
The latest Baker Hughes oil rig-count revealed there were 709 in operation during the week ending on 18 December, the same as in the previous week.
That might explain the 1.14% drop in West Texas crude futures for January delivery to $34.55 per barrel in NYMEX trading. The drop below the $35 mark may have opened the way for further falls, according to technical analysts.
To take note of, dollar/yen – often considered a proxy for risk-appetite globally – was on the backfoot after the Bank of Japan failed to deliver new stimulus measures at its monetary policy meeting on Friday.
Markit´s services sector purchasing managers index slipped in December from a reading of 56.1 to 53.7 (consensus: 55.9) – its lowest level since December 2014.
The S&P 500 ended lower for the week after at one point having notched up gains of as much as 3%.
Over 12bn shares changed hands Friday on US exchanges, some 71% more than the three-month average and the most since last summer´s sell-off in equity markets, according to Bloomberg data.
Disney and Boeing facing tougher reality
Walt Disney got thumped by a downgrade to ‘sell’ out of BTIG analyst Rich Greenfield.
Shares in jet manufacturer Boeing, the world´s largest aerospace group, dropped 4.1% after analysts warned the combination of less expensive oil and higher interest rates could dampen aircraft sales.
Stock in Transocean retreated after Statoil ASA cancelled a lease on an ultra-deepwater oil rig because of a lack of work for it.
Carnival Corp. shares tacked on 4% after informing the market that its bookings for the first quarter of 2016 were well ahead of last year´s.
Stryker might be set to offer $18bn for Smith&Nephew, according to a person with knowledge of the situation, StreetInsider reported.
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