US Stocks Slide as Crude Oil Declines, Blizzard Cripples New York
New York (Mar 14) Stocks fell Tuesday morning as crude oil slumped on higher global production growth forecasts. The S&P 500 was down 0.52%, the Dow Jones Industrial Average fell 0.3%, and the Nasdaq declined 0.6%.
Crude oil declined on Tuesday after the Organization of Petroleum Exporting Countries raised its forecasts for non-member output this year as demand grows and activity in shale production rises. OPEC anticipates non-member production to rise by 400,000 barrels per day, according to its monthly report. Prices have already been under pressure after a weekly reading on domestic supplies showed stockpiles at record levels.
West Texas Intermediate crude was down 1.9% to $47.45 a barrel on Tuesday morning.
The energy sector was one of the worst performers on markets Tuesday. Major oil companies including Halliburton (HAL) , Chevron (CVX) , ExxonMobil (XOM) , Total (TOT) and BP (BP) were all lower, while the Energy Select Sector SPDR ETF (XLE) fell 1.8%.
Producer prices in the U.S. rose at a faster pace than anticipated in February. The Producer Price Index increased by 0.3%, according to the Bureau of Labor Statistics, half the increase of a month earlier but three times higher than estimates. Core prices rose by 0.3%, higher than a targeted 0.2% increase.
It's likely to be a low-volume day of trading on Wall Street as a blizzard dumps nearly two feet of snow on New York City. Mayor Bill de Blasio declared a state of emergency for the city, warning that the storm could bring 16 inches to 20 inches of snow. Non-essential travel has been banned and the city's schools have been shut. More than 5,000 flights had been cancelled.
Trading already has been fairly quiet this week as investors sit in wait for the Federal Reserve's announcement on interest rates Wednesday afternoon. Members will convene on Tuesday morning, regardless of the storm, for their two-day meeting to decide on monetary policy. The Fed is widely expected to hike interest rates by 25 basis points, particularly after a robust February jobs report backed up the case for higher rates. The Fed will also release updated forecasts, including the '"dot plot" matrix that visualizes each Fed member's expectations for the pace of future hikes.
"The Fed will move on Wednesday, which will not be a surprise," said Tom Siomades, head of the investment consulting group of Hartford Funds. "Where all the angst is coming from is whether the Fed shifts from a slow, hyper-cautious approach to something more dynamic and more frequent. The economy is healthy and growing, and the Fed, in my estimation, is moving toward a more normalized approach to the economy by moving away from stimulus and toward managing inflation and making sure the economy does not overheat."
The Congressional Budget Office released its score on the Republicans' American Health Care Act late Monday afternoon and the details refute Donald Trump's promise for everyone to remain on health care. The CBO calculated that 24 million more people will be uninsured by 2026, including 14 million more by 2018. Premiums are expected to jump 20% in the individual market in 2018 and 2019.
Valeant Pharmaceuticals (VRX) fell more than 10% on Tuesday after activist investor Bill Ackman reported he had liquidated his position in the drug company and plans to eventually step down from the board.
Source: TheStreet
