US stocks dropped on Monday extending their decline of two weeks for equities with the energy sector being weighed on by weakness in oil prices, ahead of the start of the season of corporate earnings.
Prices of oil continued with their downward drop and caused the equities to drag. Brent crude dropped more than 5% to $47.44 and US crude dropped 4.6% to $46.13 as Goldman Sachs cut its short-term forecasts of prices with the Gulf producers showing no signs controlling output.
According to Reuters, the S&P energy index dropped 2.9% easily to become the worst performer of the 10 major sectors of the S&P.
Keith Bliss, senior vice president of Cuttone & Co said, “People are truly becoming concerned about global growth stories here.”
He added, “People are getting a little bit ahead of this selloff in anticipation of fourth quarter earnings announcements and more worry about the large multinationals and what they are going to say about demand globally, as well as the impact of the dollar.”
The Dow Jones Industrial Average dropped 81.33 points or 0.46% to 17,656.04 while the S&P 500 dropped 14.59 points or 0.71% to 2,030.22. The Nasdaq Composite Index declined 0.69% or 32.61 points to 4,671.46.
Since hitting the record high on 29 December, the S&P 500 has dropped about 2.6 % amid concerns on global growth, falling prices of oil and the potential exit of Greece from the euro zone.
Fox Business quoted chief market strategist at Wunderlich Securities, Art Hogan as having said, “During this cycle, since the beginning of the precipitous selloff in the commodity price, we have seen very few days where you would have a three percent move in crude and see stock prices hold onto gains.”
NPS Pharmaceuticals rose 8.4% to $45.44 after Shire Plc agreed to take over the company for $5.2 billion. The US listed shares of Shire dropped 1.3% to $214.60.
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