Stocks plunge; S&P 500 down 10% in two months

The S&P 500 index is now down 7.5 percent this year, while the Dow is off 7.3 percent.

Several oil and gas companies fell sharply as crude prices wavered. Ford fell 65 cents, or 5.1 percent, to $12.20. Japan’s Nikkei 225 Index surged up by 2.9%, while Hong Kong’s Hang Seng Index jumped by 1.1%.

Shares of Intel were up 1 percent at $32.39 premarket after JP Morgan resumed coverage of the stock with an “overweight” rating.

Consumer discretionary stocks in the S&P 500 slumped 3.4 per cent, among the worst performers for the day. It was the worst day for the index since September 28.

On Wednesday, it appeared as if oil markets were rebounding for the first time in almost 10 days after better than expected data from China. The European mining and energy indexes gained 3 percent and 2.8 percent respectively, helped by rises in Rio Tinto, BHP Billiton, BP and Royal Dutch Shell of between 2 and 4 percent. Brent settled at $30.31 a barrel, the first close below US crude since December 30, 2015. (CSX) shares fell 6.8% Wednesday, after late Tuesday delivered earnings that beat forecasts, but reported weaker-than-anticipated revenue (http://www.marketwatch.com/story/csx-revenue-falls-13-as-coal-shipments-decline-2016-01-12-18485624).

According to JPMorgan Chase & Co., this year’s tumble is at least partly attributable to robotic selling by quantitative investors who were forced to rebalance their funds when stocks and bonds both fell in January.

Further evidence of a glut of crude weighed on oil prices and energy stocks.

CSX, the largest rail carrier in the eastern U.S., fell 5.7 per cent to its lowest level since February 2013 as demand for rail cargo is expected to drop this year in what CEO Mike Ward called a “freight recession”.

Financials slid 2.6 per cent, with Goldman Sachs down 4.1 per cent; transports were hit with a 3.7 per cent decline despite fuel prices having plunged.

“We’re in a ideal storm”, said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in NY.

“We are much more anxious about the prospects for emerging countries outside of China, and in particular raw material producing countries”, than the Asian giant’s economic woes, leading S&P economist Jean-Michel Six told a news conference. But lower energy prices are hurting the USA companies that produce oil and gas. Analysts estimate profits for S&P 500 members fell 6.7 per cent last quarter. Tech-sector leaders Amazon and Twitter were both down more than five percent while Google gave up 3.1 percent.

ASIA’S DAY: In Asia, stocks rallied despite the fall in Shanghai.

Precious and industrial metals futures closed mostly higher. The Straits Times Index in Singapore was trading lower by about 1.4 percent and the S&P/ASX 200 Index in Australia was down about 1.6 percent.

The MSCI Asia Pacific Index climbed 1.9 per cent, halting a seven-day drop that marked its longest run of losses since August. Gold rose $1.90 to $1,087.10 an ounce, silver rose 41 cents to $14.16 an ounce and copper was little changed at $1.96 a pound. The euro fell to $1.0851 from $1.0871 a day earlier and the dollar rose to 117.69 yen from 117.53 yen.

Declining issues outnumbered advancing ones on the NYSE by 1,600 to 1,470, for a 1.09-to-1 ratio on the downside; on the Nasdaq, 1,417 issues rose and 1,412 fell for a 1-to-1 ratio favouring advancers.