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US: Stocks drop as oil resumes downward slide

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Wall Street was higher on Thursday morning, tracking a surge in crude oil prices, a day after the US Federal Reserve gave little indication of slowing the pace of future rate hikes.

[NEW YORK] US stocks fell on Monday, with petroleum-linked shares especially weak, as oil prices resumed their downward slide.

The Dow Jones Industrial Average fell 208.29 points (1.29 per cent) to 15,885.22.

The broad-based S&P 500 dropped 29.82 (1.56 per cent) to 1,877.08, while the tech-rich Nasdaq Composite Index shed 72.69 (1.58 per cent) to 4,518.49.

Sinking oil prices have been an albatross on US stocks for much of the year, with crude supplies mounting even as the global economy slows.

On Monday, oil prices broke a two-day streak of gains on more worries about the slowdown in Chinese demand and reports that Saudi Arabia plans to push forward with energy development work without cutting back production.

"You continue to not see any stabilisation in oil prices," said Art Hogan, chief market strategist at Wunderlich Securities. Oil is "the transmission vehicle of bad news."

Dow members ExxonMobil and Chevron lost 3.4 per cent and 3.2 per cent. Others even more hard-hit included oil services company Weatherford International, which plunged 11.5 per cent, and midsized producer EOG, which fell 6.8 per cent.

Large bank shares dropped. Bank of America shed 4.4 per cent, and Citigroup and Dow member Goldman Sachs both lost 3.7 per cent.

Dow member Caterpillar, which provides industrial equipment to the oil and mining sectors, fell 5.0 per cent as Goldman Sachs downgraded the stock.

Twitter dropped 4.6 per cent as it confirmed that four top executives were leaving the company.

Analysts said the move suggests a turnaround under chief executive Jack Dorsey will likely take longer than expected. The shakeup is "likely not positive," said a note from investment bank Jefferies.

Dow member McDonald's rose 0.7 per cent as it reported a 9.9 per cent jump in fourth-quarter net income to US$1.2 billion in part due to the launch of an all-day breakfast menu in the United States.

Tyco International vaulted 11.6 per cent after announcing it will merge with Johnson Controls in a deal that shifts Johnson's headquarters for tax purposes to Ireland. Johnson Controls fell 3.9 per cent.

AFP