By Dan Strumpf and Riva Gold
A renewed fall in crude prices and downbeat results from some of
the world's biggest oil producers sent stocks sliding, while
investors bid up havens from government debt to utilities.
The Dow Jones Industrial Average fell 296 points, or 1.8%, to
16154.
The declines came on the heels of a renewed fall in oil prices
and a steep drop in quarterly profits from both Exxon Mobil Corp
and BP PLC, signs that even the sector's most resilient companies
are struggling in an environment of sharply lower oil prices.
Adding to the pain for the sector Tuesday was a wave of credit
downgrades by ratings agency Standard & Poor's, which said the
steep fall in oil prices could curtail their outlook for years.
"It's a broad-based risk reduction," said Larry Weiss, head of
trading at Instinet, in describing Tuesday's moves. The yield on
the benchmark 10-year Treasury note, fell to 1.864%, its lowest
level since last April, as investors sought out safe havens.
The S&P 500 declined 1.9%, while the Nasdaq Composite
slipped 2.2%.
Exxon Mobil Corp. reported its lowest quarterly profit since
2002 and said it would suspend its stock-buyback program, sending
shares of the Dow component falling 2.2%.
U.K. oil giant BP PLC reported a sharp quarterly loss, sending
shares in the company down 8.7%.
U.S. oil prices fell below $30 and settled down 5.5% to $29.88 a
barrel as hopes for a deal on production cuts faded. Brent, the
global benchmark, declined 4.4% to $32.72.
"The two-day decline in oil is starting to weigh on the price
action," said Michael Antonelli, equity sales trader at Robert W.
Baird.
The moves mark the latest slide for U.S. stocks this year, which
have been pummeled by diminishing expectations for global growth
and the deep slide in oil prices, which has hurt energy companies
but hasn't translated into a big uptick in consumer spending.
The S&P 500 is down 6.9% this year, while the Dow has lost
7.3%.
Steep declines in the oil price have hit equity markets hard
this year as investors fear it might signal slack in demand from
the world's largest energy consumers.
While low oil prices should boost consumer spending and help
companies save on costs, the underlying concern among investors is
whether the decline in oil prices and economic weakness in China
foreshadow a global recession, said David Donabedian, chief
investment officer at Atlantic Trust Private Wealth Management.
While Mr. Donabedian said he doesn't believe a global recession
is imminent, he expects stocks to struggle to regain traction in
the coming weeks given the persistent headwinds around China, oil,
and the corporate earnings season.
Despite a strong rally late last week "all of the same issues
that brought the [stock] market down in the beginning of the year
are still in play," said Bill Nichols, head of U.S. equities at
Cantor Fitzgerald.
The Stoxx Europe 600 fell 2.1%, with losses concentrated in the
energy and banking sectors.
Elsewhere, UBS Group reported a fall in fourth-quarter net
profit. Shares fell 6.8%.
"People are nervous about global growth," said Stephen
Macklow-Smith, head of European equities strategy at J.P. Morgan
Asset Management, noting many of the emerging markets that have
struggled this year are also large producers of raw materials.
Falling oil prices recently prompted Nigeria to request
emergency funding from the World Bank, while the Russian ruble fell
to its weakest ever level against the dollar this year.
Stocks in Asia ended mostly lower. Japan's Nikkei Stock Average
closed down 0.6%, while the commodity-heavy S&P ASX 200 fell 1%
after the Reserve Bank of Australia held interest rates steady as
expected.
The Shanghai Composite Index, however, climbed 2.3% after
China's central bank injected more liquidity into the financial
system ahead of the weeklong Lunar New Year holiday.
Alphabet reported a surge in profitability at its main Google
Internet businesses last year. Shares rose 1.3%, helping Alphabet
surpass Apple as the most valuable publicly traded company in the
world.
Gold prices fell 0.1% to $1127.20 an ounce.
Aaron Kuriloff and Leslie Josephs contributed to this
article.
Write to Dan Strumpf at daniel.strumpf@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
February 02, 2016 16:22 ET (21:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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