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US: Stocks drop as oil tumbles; Nasdaq -2.2%

Wednesday, February 3, 2016 - 06:49
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[NEW YORK] US stocks fell sharply on Tuesday, tumbling with European equities as another drop in oil prices underscored worries about global growth.

The Dow Jones Industrial Average lost 295.64 points (1.80 per cent) to 16,153.54.

The broad-based S&P 500 fell 36.35 (1.87 per cent) to 1,903.03, while the tech-rich Nasdaq Composite Index shed 103.42 (2.24 per cent) to 4,516.95.

Oil prices extended sharp losses for a second day, with the US benchmark closing under US$30 a barrel for the first time since January 21.

"It's all about oil today, there's no question about that," said Peter Cardillo, chief market economist at First Standard Financial.

"It's a question of strength and weakness, and so weaker oil prices just means weaker economic activity."

Google parent Alphabet was a rare winner, gaining 1.7 per cent to overtake Apple as the world's most valuable company after reporting a five percent rise in fourth-quarter earnings to US$4.92 billion.

Falling oil took its toll. ExxonMobil fell 2.2 per cent after reporting its weakest quarterly profits since 2002 and US shares of BP sank 8.5 per cent after reporting a US$6.5 billion loss for 2015.

Standard & Poors also downgraded the credit ratings of 10 oil companies and announced reviews of another 10. Two of the downgraded companies, Chevron and Marathon Oil, fell 4.8 per cent and 10.3 per cent, respectively.

Investors sold off banking sector stocks, with Goldman Sachs losing 5.0 per cent, Bank of America 5.2 per cent and Citigroup 4.9 per cent.

Mattel surged 13.8 per cent after reporting fourth-quarter net income of US$215.2 million, up 10.8 per cent from the year-ago level and better than expected. Worldwide sales of its iconic "Barbie" doll rose one per cent.

Royal Caribbean Cruises sank 15.2 per cent after it projected 2016 earnings of US$5.90-US$6.10 per share, below the US$6.27 expected by analysts. Rival firm Carnival fell 7.9 per cent.

Dow Chemical jumped 5.8 per cent after reporting better-than-expected earnings and announcing that chief executive Andrew Liveris would leave the company after it merges with DuPont.

AFP