You are here

US: Stocks end lower as Opec move hits petroleum shares


[NEW YORK] Oil industry stocks tumbled on Monday, leading US stocks lower, as crude prices sank to their lowest close since February 2009 in the wake of last week's Opec decision.

Dow members ExxonMobil and Chevron lost 2.6 per cent and 2.7 per cent respectively, while shale producer Continental Resources plunged 9.3 per cent.

The Dow Jones Industrial Average closed down 117.12 points (0.66 per cent) to 17,730.51.

The broad-based S&P 500 dropped 14.62 (0.70 per cent) to 2,077.07, while the tech-rich Nasdaq Composite Index fell 40.46 (0.79 per cent) to 5,101.81.

The big pullback in petroleum-linked stocks came after Friday's decision by the Organisation of the Petroleum Exporting Countries not to cut output dimmed the odds of any quick recovery in oil prices.

Among the bigger losers, oil-services company Weatherford International shed 6.0 per cent, while Devon Energy dived 10.1 per cent after announcing US$2.5 billion in deals to buy US oil assets from smaller companies" Jack Ablin, chief investment officer at BMO Private Bank, said investors are also worried the troubles in the energy business could start "migrating" into the broader financial system due to debt defaults.

Office Depot plummeted 15.8 per cent and Staples 13.8 per cent after the US Federal Trade Commission challenged their US$6.3 billion merger, arguing the combination would harm the business-to-business market for office supplies and services. The companies said the FTC's case misreads the competitive market.

Auto services chain Pep Boys climbed 2.4 per cent after activist Carl Icahn announced a bid valuing the company at US$837 million. The proposal challenges the company's US$835 million deal with Bridgestone.

Keurig Green Mountain, maker of single-cup coffee pods and makers, surged 71.9 per cent to US$89.40 after announcing it would be bought by a group of private investors led by JAB Holding Company for US$92 per share in cash. The offer represents a premium of nearly 80 per cent over Keurig's closing price on Friday.

Chipotle Mexican Grill fell 1.7 per cent after it forecast earnings of US$2.45-$2.85 per share for the fourth quarter, far below analyst projections of US$4.00 per share. Sales have plunged at the company's restaurants after they were hit with an E coli outbreak in November.