[NEW YORK] The oil rout returned to Wall Street with a vengeance on Thursday, ending a three-day rally in US stocks even as European and Asian bourses bounced a day after the Federal Reserve interest rate hike.
The S&P 500 finished down 1.5 per cent as US oil prices slumped to below US$35 a barrel on worries about a persistent supply glut and about a strengthening dollar that has depressed demand for oil, which is traded in dollars on international markets.
Other dollar-denominated commodities, including copper and gold, also fell, as did equities linked to those metals.
Petroleum producers ExxonMobil and Chevron retreated, along with copper and gold producer Freeport-McMoRan and Caterpillar, which sells equipment to the oil and mining sectors.
"It's all about oil today," said Peter Cardillo, chief market economist at Rockwell Global Capital.
The US losses halted the positive momentum from the prior sessions in the US that was extended early Thursday with gains in Asia and Europe as investors welcomed the Fed's quarter-point hike Wednesday that ended seven years of near-zero benchmark interest rates, seen as a sign of confidence in the US economy.
Frankfurt's main index closed up 2.6 per cent. Paris ended the day 1.1 per cent higher, while London gained 0.7 per cent.
In Asia, Tokyo ended 1.6 per cent higher, Shanghai put on 1.8 per cent and Sydney climbed 1.5 per cent.
"The first (US rate hike) is at least over. That's a relief," Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank, told Bloomberg News.
"The domestic situation in the US looks good, and if the US is strong, that's positive for Japan." The dollar continued to pick up momentum from the Fed's move, with the euro falling to US$1.0824 from US$1.0911 Wednesday.
"Dollar bulls remained in control today," said Kathy Lien, managing director of BK Asset Management, who predicted more chatter on whether the US currency would reach "parity" with the euro.
Apple fell 2.1 per cent as RBC Capital Markets cut its estimates for iPhone sales in the March quarter, joining other investment banks that have highlighted the worry. RBC cut its target on Apple stock by US$10 to US$140, but maintained its "outperform" rating.
Separately, Apple named Jeff Williams as chief operating officer as part of a series of executive appointments.
Software company Oracle, food giant General Mills and consultancy Accenture all fell on disappointing earnings reports.
But FedEx rose 2.0 per cent after reporting that earnings for the quarter ending November 30 rose 4.2 per cent to US$691 million. The company said record holiday shipments are making up for continued weakness in industrial production and global trade.