Energy stocks, beaten down all week, lead a market rebound

The Russell 2000 index .RUT fell 5.1 percent for the week, its biggest weekly percentage decline since May 2012.

Implied volatility on the S&P 500 as measured by the CBOE Volatility Index rose to 22, above its long-term average of 20.

Tracking oil prices, the S&P energy index was down 3.2 per cent, leading the decliners among major S&P sectors. O , which had performed well this year, said Dennis Dick, head of markets structure at Bright Trading LLC in Las Vegas. “It’s kind of a depressing market”.

US stocks tumbled Friday, with the Dow Jones Industrial Average at one time down more than 300 points, as oil prices continued their downward spiral. Southwestern Energy plunged 14 percent.

The International Energy Agency said it sees the oil glut worsening in 2016 as demand slows and OPEC shows no signs of slowing production.

ENERGY: The price of USA benchmark crude fell further, sinking 57 cents to $36.19 a barrel in electronic trading on the New York Mercantile Exchange.

Adding to the somber mood, China’s yuan fell to its lowest in four-and-a-half years on concerns about the country’s slowing economy and expectations of a U.S. rate hike. Apple ended about 2.5 percent lower, underperforming even the Nasdaq composite, which fell below 5,000. The index has lost 11 per cent since the beginning of the month in its worst month since September 2011. The Nasdaq Composite Index decreased 111.71 points, or 2.21 percent, to 4,933.47.

France’s CAC 40 shed 1.5 percent to 4,567.42 and Germany’s DAX lost 1.7 percent to 10,423.10. Companies that are leveraged to commodities are breaking lower and then you also have flows of funds into the Treasury market because people are buying Treasuries in anticipation of inflation. A fund that tracks the bonds, the iShares iBoxx USD High Yield Corporate Bond ETF, has dropped almost 4 percent in five days.

The steep drop in oil prices adds to investor uncertainty as the U.S. Federal Reserve prepares to raise interest rates for the first time since June 2006 at its meeting next week. Recent economic reports indicate that the US economy is healthy enough to withstand a rate hike.

USA chemical giants DuPont and Dow Chemical officially agreed to merge in an all-stock deal to form a combined company valued at $130 billion.

Japan’s Nikkei 225 index lost 1% while Hong Kong’s Hang Seng index dropped 0.5%. South Korea’s Kospi lost 0.2 percent to end at 1,948.62. (ADBE) rallied 3% after the software company posted better-than-expected quarterly results (http://www.marketwatch.com/story/adobe-shares-rally-as-earnings-beat-wall-streets-expectations-2015-12-10) late Thursday. The stock hit its 52-week low of $11.26 but has recovered 12.70% versus the low range since.

“What really conspired to weigh on investors today is they weighed on the Dow-DuPont combination as a move to battle low growth”.

Emerging markets were bracing for higher US rates, and the dollar finally caved to safe-haven demand for the yen. The euro strengthened to $1.0995 from $1.0939.

METALS: Precious and industrial metals futures closed mixed. Brent crude, the worldwide benchmark, fell 31 cents to $39.82 a barrel in London.