By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Weak Black
Friday sales could hit retailers
NEW YORK (MarketWatch) -- U.S. stocks fell sharply on Monday, as
investors returned from holidays to a batch of depressing economic
news from China and turbulence in the oil and metals markets.
Stocks trimmed losses after slightly better-than-expected ISM
numbers, but the S&P 500 still braced for one of its biggest
falls in more than five weeks. The Dow Jones Industrial Average
also moved lower.
Weak Black Friday sales were putting pressure on retailers,
while nearly all 10 main sectors on the S&P 500 were in
negative territory. Industrials, consumer discretionary and
technology sector stocks were leading the losses.
Commodity prices swung wildly with oil and gold prices falling
as much as 2%, only to recover by the regular market open in the
U.S.
The S&P 500 (SPX) was on track for one of its biggest
one-day losses since late October while the Dow (DJI) also was
headed south. The Nasdaq Composite (RIXF) fell sharply, dragged by
a big fall in Apple Inc.
Volatility on the S&P 500 as measured by the CBOE VIX index
(VIX) jumped 8% to above 14.
Colin Cieszynski, chief market strategist at CMC markets, said
U.S. stocks are due for a small pullback after the impressive
six-week run.
"The fact that the technology stocks are selling off hard today
is indicative of just how extended markets became," Cieszynski
added.
The heaviest-weighted stock on the S&P 500 and Nasdaq
Composite, Apple Inc. (AAPL), fell nearly 3%. First Solar Inc.
(FSLR), Yahoo! Inc. (YHOO), Facebook Inc. (FB) and Google Inc.
(GOOGL) were also hit hard.
Energy stocks dipped in and out of negative territory as WTI
Intermediate(CLF5) and Brent crude oil prices slid as much as 2%,
before bouncing back, as last week's decision by the Organization
of the Petroleum Exporting Countries to maintain production levels
continued to rattle markets. WTI slid 14% last week and 18% for
November, the biggest one-month fall since December 2008.
Murray Edwards, chairman of Canadian Natural Resources Ltd. and
one of Canada's biggest oil investors, predicted Friday that oil
prices could collapse to $30 a barrel before stabilizing at between
$70 and $75, according to Canada-based Financial Post.
Gold(GCG5), swung wildly in the aftermath of Swiss vote to
reject a plan to force the Swiss National Bank to ramp up its
holdings of the precious metals. Gold futures fell as much 2%, but
rebounded to trade slightly higher. Silver (SIZ4) also rebounded
and was 1.7% higher, after suffering an even bigger fall than
gold.
"These lower commodity prices should be a major advantage to
commodity consuming countries, but the growing threat of sovereign
default among oil producing nations has introduced an unwanted
element of risk to global financial markets," said Rebecca
O'Keeffe, head of investment at stockbroker Interactive Investor,
in a note. Read: Why the stock market may need help from Santa
News out of Asia wasn't good either. Two separate gauges of
Chinese factory activity indicated manufacturing had lost momentum,
despite a recent cut in interest rates. Then Moody's downgraded
Japan to Aa3 from A1, citing uncertainty that the country will meet
its fiscal goals and be able to grow its economy.
ISM and Black Friday sales: U.S. manufacturers expanded at a
slightly slower, but still robust, pace in November, a survey of
executives found.
A fairly busy week of data will end with nonfarm-payrolls data
on Friday. See Economic Preview
U.S. Federal Reserve Bank of New York President William Dudley
will speak at Bernard M. Baruch College at 5:15 p.m. Eastern Time,
while Fed Vice Chairman Stanley Fischer speaks at 5:30 p.m. Eastern
Time at a symposium on the 100th anniversary of the Fed.
Retailers such as Wal-Mart Inc. (WMT), Target Corp. (TGT) and
Amazon.com Inc. (AMZN) sold off, after retail spending over the
Thanksgiving weekend fell 11%, the second straight annual decline,
according to an estimate by the National Retail Federation.
Analysts will be watching to see how sales fare on Cyber Monday,
which is one of the biggest online shopping days of the year.
Quanta Services Inc. (PWR) plunged after BB&T Capital
Markets cut its rating to hold from buy. Newmont Mining Corp (NEM)
was the biggest gainer on the S&P 500, rallying more than 5%.
(Read more about the day's big movers here:
http://www.marketwatch.com/story/mattress-firm-amazon-in-focus-on-monday-2014-12-01.)
Overseas markets: The FTSE 100 index fell sharply as oil and
mining-related stocks tracked volatile commodity prices. Other
European markets also were under pressure. With the exception of a
gain for the Nikkei 225 index . Asian stocks were battered by
falling oil prices and worse-than-expected outcome for those
Chinese manufacturing surveys. The Australia's S&P ASX 200
index slid 2%, dragged by energy stocks. The dollar(USDJPY), eased
as commodity prices rebounded.
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