Wall Street pared heavy losses in afternoon trading and the Nasdaq Composite Index erased a a decline as concerns about the strength of the global economy deepened, with U.S. oil recording its worst settlement since May 2003.
At 3:37 p.m. in New York, the Dow Jones Industrial (INDEXDJX:.DJI) dropped 1% to 15,848.85, the S&P 500 (INDEXSP:.INX) slid 0.5% to 1,871.07, while (INDEXNASDAQ:.IXIC) rose 0.5% to 4,498.34.
The energy sector was the worst performer on the S&P 500, down 4.4% on the day and 14.7% since the beginning of the year.
U.S. benchmark West Texas Intermediate (WTI) prices for February delivery settled at $26.55 a barrel, down 6.71%, up slightly from an intraday low of $26.19, its weakest price since May 2003.
Brent futures fell by $0.91 to $27.87 a barrel, up slightly from a trough of $27.10.
IBM (NYSE:IBM) fell nearly 5% to $121.88 and Goldman Sachs (NYSE:GS) dropped 0.8% to $155.88 after both issued disappointing earnings reports.
Fears of a slowdown in China, a key market for U.S. companies, has also weighed on equities and commodities.
Data on Wednesday showed the cost of living in the U.S. dropped in December, led by a slump in commodities that’s roiling global markets.
Housing starts fell 2.5% last month, lagging behind economists’ expectations, and indicating that home builders cut back slightly on new construction in the final month of 2015.
Lunchtime
The fall on the Dow Jones reached 500 points in the lunchtime session with mixed economic data barely noticed in the maelstrom.
The focus was very much on oil prices, where the US benchmark, West Texas Intermediate (WTI), had once again fallen below the price of the European benchmark, Brent Crude.
The most widely traded futures for WTI was down 7,2% at US$26.42 a barrel in New York trading, while in London Brent Crude was off 5.3% at US$27.25 a barrel.
In all the mayhem, there were a few stocks defying the trend, among them gene-delivery specialist Genvec (NASDAQ:GNVC), up 5.9%.
The share price collapsed two weeks ago when its partner, the Swiss drugs giant Novartis, revealed that enrolment on the clinical study for CGF166, Genvec's lead candidate for hearing loss, had been paused.
Today, the company's boss, Douglas Swirsky, said: "While there is no certainty the trial will continue and timing is also uncertain, we hope enrolment can resume in the coming months and that the trial will be completed sometime in 2017, as previously expected."
Shanghai-based SPI Energy (NASDAQ:SPI) picked a bad day to announce the appointment of a new independent director and the establishment of various board committees, but managed to make progress nevertheless.
Open
The Dow Jones opened more than 300 points lower as investors took fright at a shake-out in Asia and the continued slump in oil prices.
The Dow Jones was down 2% at 15,697 after half an hour's trading, while the broader-based S&P 500 was also down 2%, or 38 points, at 1,843.
The tech-heavy Nasdaq Composite was even harder hit, down 2.3% at 4,374.
The oil price hit new 12-year lows, sliding below the US$28 a barrel mark on the New York Mercantile Exchange.
Among the heavy hitters, investment bank Goldman Sachs (NYSE:GS) outperformed the market, shedding only 1.5% at US$154.71, despite seeing quarterly profits fall, partly as a result of stumping up the largest regulatory penalty in its history.
Among the minnows, Chinese developer of mobile enterprise solutions, Kingtone Wirelessinfo Solutions (NASDAQ:KONE) shot up by more than two-thirds on its full-year results.
Revenues increased by 42.6% to around US$8.8 million in the year to end-September from some US$6.2 million in the prior year period, propelling the company into the black, with net income of US$1mln versus a nominal loss the year before.
Zafgen (NASDAQ:ZFGN) almost doubled in price as it said tests showed its experimental obesity drug, Beloranib, had proved successful in treating patients with a rare genetic eating disorder.
Pre-open
After yesterday's indecisive showing the markets have no doubt about today's direction of travel: down, down, deeper and down.
Skittish Chinese markets overnight and plunging oil prices today have opened a trap-door beneath equities across the world.
Spread betting quotes suggest the S&P 500 will kick-off at around 1,850, versus last night's close 1,881. The Dow Jones average looks like it will open at around 15,736, some 270 points lower than last night's close.
“The aggressive nature of this morning’s sell-off highlights how fragile confidence in 2016 has been,” suggested Alastair McCaig, a market analyst at spread betting outfit IG.
“Once again, the financial world’s focus will be on the Alps as Davos hosts its annual World Economic Forum. Traders will be conscious that the potential for market-moving commentary is always there, due to the volume of central bankers and corporate leaders willing to talk to the press. Oil remains below $29 a barrel and looks more inclined to test the limits of how low it can go, rather than find any traction regardless of the consequences,” McCaig suggested.
On the economic front, investors will be watching out for today's inflation data and the housing numbers, both due for release ahead of the start of trading.
In the papers, the New York Times noted that while plummeting oil prices are cutting into profits, they are not threatening big banks’ capital cushions, analysts say, thanks to rigorous regulation.
Reporting from the Davos World Economic Forum, the newspaper asserts that there will be a lot of talk at the conflab about doing something about gender equality.
The Wall Street Journal reported that Goldman Sachs's quarterly profit tumbled, thanks in part to the firm’s agreement to pay the largest regulatory penalty in its history.
In political coverage, it said Donald Trump kicked off a final campaign sprint on Tuesday for the first presidential nominating contest, reveling in an attack from Iowa’s longtime governor against his chief rival, Senator Ted Cruz, and welcoming an endorsement from former GOP vice-presidential nominee Sarah Palin.
In The Washington Post Palin's endorsement was described as the latest prize for Trump as he battles for the hearts, minds and wallets of conservative Americans.
On the business page, meanwhile, it detailed how Trump somehow failed to make money out of running a casino in Atlantic City.
“In April 1990, the Taj [Mahal casino] opened as the world’s largest casino-hotel complex, joining Trump’s other holdings already operating in Atlantic City, the Trump Plaza and Trump’s Castle, but Trump could not keep pace with his debts on the three casinos. Six months later, the Taj defaulted on interest payments to bondholders as his finances went into a tailspin. In July 1991, Trump’s Taj Mahal filed for bankruptcy, the first and most significant of the four that his companies have experienced,”the Post said.
In business news it carries an Associated Press report that Johnson & Johnson expects to cut about 3,000 jobs over the next two years as the health care conglomerate works to restructure its medical devices business.