By Ellie Ismailidou and Sara Sjolin, MarketWatch
CPI, housing-starts data offer mixed picture of U.S. economy
U.S. stocks amassed losses Wednesday, with the Dow industrials
plummeting over 450 points, as a renewed rout in oil prices and
global equities triggered a selloff on Wall Street.
The S&P 500 dropped 53 points, or 2.8%, at 1,828, falling
below its Aug. 25 closing low of 1867.61--a level viewed as key
technical support point for the index, suggesting further moves
lower may be ahead. The index fell the farthest below its 200-day
moving
(http://www.marketwatch.com/story/sp-500-drops-more-than-10-below-its-200-day-moving-average-2016-01-20),
since the October 2011 correction, according to data provided by
FactSet.
The energy sector was the worst performer on the S&P 500,
down 5% on the day and 15% since the beginning of the year, led by
Devon Energy Corp. (DVN), down 12.3% on the day.
The Dow Jones Industrial Average dropped 450 points, or 2.8%, to
15,565 and the Nasdaq Composite was off 129 points, or 2.9%, at
4,347.
The stock-market rout came as equities racked up sharp losses
world-wide, fueled by oil falling below $28
(http://www.marketwatch.com/story/oil-prices-hit-fresh-12-year-low-under-28-a-barrel-2016-01-20)
a barrel and worries over an economic slowdown in China and other
developing markets.
"The fledgling hope from yesterday that markets were on the turn
has been quashed by sharp overnight falls in Japan and Asia," said
Rebecca O'Keeffe, head of investment at stockbroker Interactive
Investor, in a note.
"With every upturn being followed by deeper falls, investors are
increasingly wary as it becomes more and more difficult to
determine what might happen next," O'Keeffe said.
What is more concerning is that "even as investors are turning
their focus to U.S. domestic fundamentals, we still don't see
equity support in terms of buying," said Howard Silverblatt, senior
index analyst at S&P Dow Jones Indices.
Including Wednesday morning, out of 46 issues on the S&P 500
that have reported earnings, 35 beat expectations, with 11 of 14
financials beating, according to data from S&P Dow Jones
Indices. Yet aggregate earnings per share for the S&P 500 were
estimated to drop nearly 6% year-over-year, according to data from
S&P Capital IQ.
"Earnings will be the main issue that will make or break the
market... By this time next week we will be so deep into the
earnings [season] that you can't miss it," Silverblatt added.
Meanwhile, a flurry of economic data offered a mixed picture of
the U.S. economy, but did little to hearten the gloomy sentiment
hurting the market.
The U.S. consumer-price index dropped 0.1% in December,
(http://www.marketwatch.com/story/inflation-falls-again-in-december-cpi-finds-2016-01-20)
but core CPI, which excludes food and energy, rose 0.1%. Though the
headline number came in lower than expected, the core was in line
with economists' expectations. For all of 2015 inflation rose just
0.7%, the second slowest rate in 50 years.
Housing starts fell 2.5% last month
(http://www.marketwatch.com/story/housing-starts-fall-25-in-final-month-of-2015-2016-01-20),
missing economists' expectations, and indicating that home builders
cut back slightly on new construction in the final month of
2015.
Meanwhile, in Asia
(http://www.marketwatch.com/story/hong-kong-stocks-hit-312-year-low-japan-nears-bear-market-2016-01-19),
Japan's Nikkei slid into bear market territory, which marks a 20%
slump from a recent high. And in Europe, markets were hit across
the board, with the Stoxx Europe 600 index tumbling over 3% to
close at its lowest level since late 2014
(http://www.marketwatch.com/story/european-stocks-tumbling-toward-lowest-close-in-more-than-a-year-2016-01-20).
Read:China's problems now spilling into Hong Kong
(http://www.marketwatch.com/story/have-investors-lost-faith-in-hong-kong-as-well-as-in-china-2016-01-19)
Oil blues: Crude oil hit fresh 12-year lows to trade below $28 a
barrel
(http://www.marketwatch.com/story/oil-prices-hit-fresh-12-year-low-under-28-a-barrel-2016-01-20)
for the February contract, which expires at the end of trade
Wednesday. Crude for March delivery fell 2.4% to $28.85.
The losses weighed on U.S. oil companies, with shares of Chevron
Corp. (CVX) down 4.4%, Exxon Mobil Corp. (XOM) off 2.6%, and
Anadarko Petroleum Corp. (APC) 5.2% lower. Seadrill Ltd. (SDRL.OS)
slid 15.7%.
Other movers and shakers: International Business Machines Corp.
shares (IBM), retreated 4.6% after the company late Tuesday
reported a drop in fourth-quarter earnings
(http://www.marketwatch.com/story/ibm-profit-falls-on-lower-revenue-2016-01-19-164854141).
Read:IBM needs software to save it from prolonged downfall
(http://www.marketwatch.com/story/ibm-needs-software-to-save-it-from-prolonged-downfall-2016-01-19)
U.S.-listed shares of Royal Dutch Shell PLC (RDSB.LN) dropped
5.4% after the oil giant forecast fourth-quarter profit fell as
much as 50%
(http://www.marketwatch.com/story/shell-profit-falls-up-to-50-as-oil-prices-slump-2016-01-20).
Netflix Inc. (NFLX) reversed premarket gains to drop 5.9%
Wednesday afternoon, after the media-streaming company late Tuesday
released earnings that beat expectations
(http://www.marketwatch.com/story/netflix-shares-up-on-earnings-beat-company-predicts-modest-q1-2016-01-19).
Shares of Goldman Sachs Group Inc. (GS) slid 2.5% after the Wall
Street bank reported a sharp slide in fourth-quarter profit
(http://www.marketwatch.com/story/goldman-sachs-profit-hurt-by-massive-settlement-2016-01-20).
Earnings were dented by the bank's agreement last week to pay the
largest regulatory penalty
(http://www.marketwatch.com/story/goldman-sachs-to-pay-record-5-billion-penalty-over-sale-of-mortgage-bonds-2016-01-15)
in its history over the sale of mortgage bonds.
Restaurant operator Brinker International Inc. (EAT) fell 4.8%
after its second-quarter revenue missed expectations
(http://www.marketwatch.com/story/brinker-international-second-quarter-revenue-misses-reaffirms-2016-guidance-2016-01-20).
Energy-infrastructure company Kinder Morgan Inc. (KMI) reports
earnings after the market closes.
Other markets: The dollar traded higher against other major
currencies and flirted with an all-time high against the ruble .
The buck also rose to a 13-year high against the Canadian dollar,
(http://www.marketwatch.com/story/the-canadian-dollar-is-getting-crushed-2016-01-12)
dragged down by falling energy prices.
Read: Wednesday is make-or-break day for Brazil's currency
(http://www.marketwatch.com/story/wednesday-is-a-make-or-break-day-for-brazils-currency-2016-01-19)
Most metals declined, but gold rose 1.2% as the financial market
volatility spooked investors into perceived as havens. Treasury
yields plunged as demand for U.S. government debt surged.
(http://www.marketwatch.com/story/treasury-yields-fall-as-investors-flee-to-safety-2016-01-20)
(END) Dow Jones Newswires
January 20, 2016 12:16 ET (17:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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