Stock slide accelerates, oil plunges below $30 a barrel

Wall Street were set to open sharply lower on Friday, as oil prices dived below $30 per barrel, sending fresh tremors through financial markets globally as investors fret about a prolonged economic slowdown.

Fueling concerns, the price of crude fell below $30 per barrel to $29.28 – the cheapest since 2003 – with eyes focused on Iran as it prepares to re-enter the global oil market following a landmark worldwide accord with world powers. The steep slump in crude from over $100 a barrel in the summer of 2014 has eviscerated energy company profits and made it much harder for them to pay off their debts.

Intel dropped 9.1% after the chipmaker posted its fourth-quarter results, noting its personal computer business continues to slump.

The Dow Jones Industrial Average dropped 390.97 points (2.39 per cent) to 15,988.08, after getting as low as 15,842.11.

All three major stock indexes – the Dow, the Nasdaq composite index and the Standard & Poor’s 500 – are now in a correction, a drop of 10 percent or more from their recent peaks.

Economists said the expansion of the Chinese economy was held back by sluggish domestic and external demand, weak investments, factory overcapacity and high property inventories, which exacerbated deflationary pressures in the economy.

Overseas, the Shanghai Composite lost 3.6%, Germany’s DAX lost more than 2.5% and Japan’s Nikkei lost 0.5% to close at 17,147 – down almost 15% from its early December high and down. US markets fell further on Friday after the government said retail sales dipped in the critical month of December. Tensions in the Middle East are high, and the plunge in prices of oil and other commodities are raising concerns about global economic growth and decimating the profits – and share prices – of materials producers. On Thursday, the Dow had jumped 228 points, a almost two percent increase for the day. There is one direction to this trade in the immediate term: “Lower”, said Peter Kenny, an independent market strategist and founder of Kenny’s Commentary.

Citigroup was down 7.5 percent at $41.99, while Wells Fargo fell 4.6 percent to $48.29, after reporting largely in-line quarterly earnings.

US gold futures for February delivery settled up 1.6 percent at $1,090.70 an ounce. The VIX is based on prices of S&P 500 options that investors tend to rush to when they are fearful of stock declines.

The beaten-down energy sector’s 4.43 percent slide led the declines, as oil prices fell 6.5 percent. Friday was the first time since August 25 that the index ended below 16000.

USA stock markets will be closed Monday for Martin Luther King Jr.’s Birthday holiday. Also, U.S. consumers appeared to curb their spending in December, handing retailers a lackluster finish to a weak year, according to Commerce Department data released Friday.

“The key theme for 2016 will be real fundamental adjustments that can rebalance markets to create the birth of a new bull market, which we still see happening in late 2016”, Goldman said in a report. The beaten-down energy sector fell 2.9 percent, the second-biggest declining sector on the S&P 500.