Oil prices tumble, but stocks trim losses after big slump

Another plunge in the price of crude oil sent stocks sharply lower on Wednesday, bringing the market to its lowest level in almost two years.

The Dow Jones industrial average was down more than 500 points, a drop of 3.5 percent, at a little after noon ET, though it later rebounded somewhat.

ENERGY: Benchmark U.S. crude for March delivery was down 87 cents, or 3.1 percent, at $27.59 per barrel in electronic trading on the New York Mercantile Exchange.

Dow closed down 249 points, or 1.6 percent, at 15,767. And in Europe, markets were hit across the board, with the Stoxx Europe 600 index tumbling over 3% to close at its lowest level since late 2014 (http://www.marketwatch.com/story/european-stocks-tumbling-toward-lowest-close-in-more-than-a-year-2016-01- 20).

The Nasdaq composite index shed 5.26 points, or 0.1 per cent, to 4,471.69.

Plummeting oil prices dragged global stocks down on Wednesday, raising fears that major markets are headed for volatility for much of the year.

Trader Michael Capolino (right) watches prices on the floor of the New York Stock Exchange Wednesday. Its stock climbed $1.18, or 3%, to $40.48. Volkswagen fell 5 per cent and steel producer ThyssenKrupp retreated 3.5 per cent. Commerzbank and Deutsche Bank also contributed to declines, with losses of at least 5.5 per cent. He expects prices to return to that level by the end of next year as oil companies pare back exploration and the glut is worked off. Energy companies led the way lower with a drop of 4 percent. Eight stocks in the S&P 500 fell more than 9 percent today. Germany’s DAX added 0.1 percent to 9,395.74 and France’s CAC gained 0.2 percent to 4,133.16.

“We were oversold and we didn’t keep falling off the table”, said Walter “Bucky” Hellwig, who helps manage $17 billion as a senior vice president at BB&T Wealth Management in Birmingham, Alabama. China’s Shanghai Composite sank 3.2%. Permits, a proxy for future construction, also fell on a decline in applications for multifamily projects.

“Just getting up every morning and seeing the S&P futures down 1-2 percent has a near-term psychological impact and puts some investors into risk-off mode”, Fenske said.

“The longer fear is dominating the longer we are likely to be on the back of these big swings with safe havens dominating any kind of upside moves, but with poor macro data from China and a fear of lower global GDP then any chance of sustainable upside, without hugely positive macro data from the United States or Eurozone it seems that now any upside will be short lived”.

It’s still too early to say the market has hit rock bottom, but there are signs panic selling is leading a stampede out of the market that will eventually clear the way for rising prices and a recovery bounce. Brent crude, a benchmark for global oils, lost $1.02, or 3.5 percent, to $27.4 a barrel in London.

Japan’s Nikkei entered bear-market territory, down more than 20 percent from its June peak. The yield on the 10-year Treasury note fell below 2 percent, which is generally considered a key psychological milestone for investors. The yields fall as prices rise.

CURRENCIES: The dollar fell to 116.98 yen from 117.19 yen in the previous trading session.