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The best thing that could be said about Wednesday's trading session is that it did not get much worse after a terrible start.
The Dow Jones Industrial Average closed at 16,907, down 252 points, while the broader-based S&P 500 shed 27 points to close at 4,836. The Nasdaq Composite lost 55 points to finish at 4,836.
Although the White House cast doubt on North Korea's claim that it had successfully tested a hydrogen bomb, the market reacted with nervousness.
Later in the day the minutes from the December meeting of the Federal Reserve's policy makers were released, showing that some committee members had doubts about the wisdom of the timing of the Fed's decision to start raising interest rates given the relatively docile inflation outlook.
Meanwhile, crude oil prices continued to plunge, with both the US an European benchmarks closing at their lowest levels since 2004.
Mid-session
After opening sharply lower, stocks have stabilized, despite more carnage on the oil futures markets.
While the latest inventories data from the US Energy Information Administration showed that crude stockpiles fell by 5.1mln barrels in the week ended 1 January, gasoline inventories rose.
“US crude inventories tumbled by 5.1 million barrels last week, providing the most fleeting of rallies in oil,” noted Joshua Mahony at spread betting firm IG.
“With two of the major OPEC members in Saudi Arabia and Iran butting heads on both a political and religious basis, the idea that we could see any form of compromise to cut production seems foolhardy at best. Iran will relish the chance to pump as much oil as possible to make up for years of sanctions, and with Saudi Arabia unwilling to lose market share, global production only seems to be heading in one direction. This certainly is not good news for oil and gas investors who will surely be wondering when the rout will end,” he added.
Brent for February delivery slumped 5.6% to US$34.29 a barrel, while the US benchmark, West Texas Intermediate dived 5.5% to US$34.00 a barrel.
Predictably, energy stocks were about as popular as an invitation from Donald Trump to dine in a Mexican restaurant, with Southwestern Energy (NYSE:SWN) slumping 14.4%, Murphy Oil (NYSE:MUR) tumbling 11.8% and Marathon Oil (NYSE:MRO) crashing 11.2%.
Elsewhere, General Steel (NYSE:GSI) lost more than a quarter of its value, as it revealed it is not in compliance with NYSE regulations concerning stock market listing standards. The company has six months to come up to snuff on this score.
Open
US stocks fell out of bed with a bump today, shaken by further evidence of a slow-down in the growth of the world's second largest economy.
The Caixin China services purchasing managers' index eased to 50.2 in December, from 51.2 in November, with the only consolation being that a reading above 50 indicates expansion.
In the US, the trade deficit narrowed by just over US$2bn to US$42.37bn, but the reading was not quite as good as it seemed at first glance, according to Rob Carnell at ING Bank.
“The deficit was not materially affected by petroleum flows or prices, with the ex-petroleum deficit actually narrowing even more than the headline figure
“What appears to be dominating this result is a sharp (1.7% mom [month-on-month]) decline in imports, particularly on the goods side (service imports broadly unchanged), and this may reflect a much weaker level of underlying demand in the economy than some other recent data have suggested. Exports were a little softer too, but it is weak imports that dominated this result,” Carnell claimed.
Payrolls processing firm ADP's monthly private sector employment report is by no means a reliable guide to the official non-farm payrolls data, due out this Friday, but a 275,000 rise in December, following a 211,000 increase in November, provided some much needed if meager encouragement for the bulls.
The Dow Jones was off 237 points after just over half an hour's trading at 16,921, which was a tad better than feared. The S&P was off 24 at 1,993 and the Nasdaq Composite was down 54 at 4,837.
Energy companies were prominent among the losers among blue-chips, particularly Marathon Oil, CONSOL Energy and Anadarko Petroleum.
A 9% year-on-year increase in sales at car seller AutoNation (NYSE:AN) was not enough to send the shares sharply in reverse.
The stock plunged 11.5% to US$50.23, having sunk to a 52-week low of US$47.91 at one point.
Moving sharply the other way was Majesco Entertainment (NASDAQ:COOL), up 81% to US$1.90, after it announced a special dividend of 33 cents a share.
Aussie stock Samson Oil (NYSEMKT:SSN) saw its American Depositary Receipt (ADR) soar 273% to US$1.45 after it entered into a contract to acquire a parcel of oil and gas leases, producing oil and gas wells, currently shut-in wells and associated facilities in North Dakota and Montana for a cash price of $16.5mln.
Pre-open
Hopes that yesterday afternoon's rally would continue are set to be comprehensively dashed, after more disappointing economic data from China.
Chinese services data reinforced fears of an economic slow-down in the People's Republic, while news that North Korea has successfully tested a nuclear bomb added to global jitters.
According to spread betting quotes, the Dow Jones industrial average is set to open at 16,910 or thereabouts, which is about a 250 point fall.
The broader-based S&P 500 is seen shedding 28 points or so to open around 1,989.
A busy day is in prospect on the US macro data front, with the ADP private-sector payrolls report and the release of the minutes from the Federal Reserve’s December meeting.
“The fact investors are in for a big US data dump may not help matters either; the ADP non-farm employment change and trade balance numbers are expected before the bell, whilst the Markit and ISM services PMI (and the latest factory orders) arrive later in the afternoon,” notes Connor Campbell, at spread betting firm Spreadex.
“It will be interesting to see a) how the markets react to US data now the guiding hand of an impending rate hike is no longer in place, and b) if any good news can break through the thick layer of bearishness currently coating the markets,” he added.
In the newspapers, the New York Times reports that Microsoft faces new scrutiny in China over its business practices.
The Boston Globe reports that the financial performance of the first slot machine casino in Massachusetts has been disappointing, though the chairman of the Massachusetts Gaming Commission, Stephen Crosby, said fives months of operation does not provide enough data to provide any meaningful conclusions on the future of legalized gambling in the area.
The Washington Post said North Korea's claim that it has successfully tested a powerful hydrogen bomb has drawn worldwide condemnation, and that the United Nations Security Council is set to hold an emergency meeting to discuss the situation.
The Wall Street Journal claims that a sacred cow is about to get slaughtered at Twitter. According to the good old stand-by of “a person familiar with the matter”, Twitter is planning to extend its 140-character limit to 10,000.
And that's all we've got room for this morning ...