After Upward Start, Markets Drop On Oil
U.S markets opened higher this morning, led by gains in big technology companies, which (along with many other sectors) have had a rough start to the year.
By Paolo Palazzi-Xirinachs
Tuesday, January 12, 2016
However, the markets have since pared their gains as oil prices have reversed their course. U.S. stocks have opened higher in the past two sessions, only to reverse course later in volatile trading as investors continue to fret about a China-led global growth slowdown and sharp turns in oil prices.
Having fallen nearly below $30 a barrel in previous sessions, oil prices recovered somewhat this morning, before dropping again to near $30. West Texas Intermediate oil tumbled 4.1% to $30.13 after earlier climbing 2.6%. The CBOE Crude Oil Volatility Index, a gauge of anticipated swings in U.S. crude prices, closed on Monday at the highest since February. Oil appears as if it will be a continuing part of the economic story for sometime to come.
The S&P 500 was up 0.1% just before noon EST, after jumping as much as 1.2% earlier in the morning. The main U.S. equity benchmark’s tumble to start 2016 has left it 9.1% below its all-time high set in May. It is 3.7% above the bottom of an August swoon, which was also sparked by growing anxiety over the impact of China’s economic weakness on worldwide growth.
Investors will now be turning their attention to corporate earnings, after Alcoa Inc. unofficially kicked off earnings season yesterday. The aluminum producer surprised investors with mixed results, posting better than expected earnings despite an 18% drop in sales. Alcoa stock fell 10% today. Intel and Apple shares have risen 2%, the biggest gains in the Dow today. Energy stocks also were doing well in the early going as the price of oil turned higher, but have lost momentum entering the afternoon session.
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