US stocks hit lowest levels since 2014 as oil prices slump

U.S. sharemarkets followed other global markets lower. So stocks made huge gains in the years since the financial crisis while the US economy churned out years of steady but unspectacular growth.

Brent crude, a benchmark for global oils, fell 88 cents, or 3.1 percent, to $27.88 a barrel in London. Stocks in Europe were also rocked, with the benchmark indices in the United Kingdom and France dropping 3.5% apiece and Italy’s market plunging almost 5%.

THE QUOTE: The S&P 500 clawing back from a 3.7 percent fall on Wednesday “should provide a morsel of sorely-needed confidence into the equity markets in Asia”, Bernard Aw, a market strategist at IG in Singapore, said in a report.

“If you look at crude prices, they are shooting right back up”, Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, said ahead of the close. Chevron sank $3.03, or 3.7 per cent, to $78.48, the biggest loss in the Dow average. Shares of Devon Energy, Consol Energy and Murphy Oil all plummeted 10% or more on Wednesday. Despite recent drops in the price of oil, many residents of Andrews, and similar towns across the Permian, are trying to take the long view and stay optimistic. It depends on why prices are lower.

The unrelenting fall in oil and commodities prices has dragged down currencies for major exporters – the value of the Russian ruble has fallen to an all-time low of 82 to the dollar, and last week the Australian dollar hit a 7-year low.

USA crude fell below $27 a barrel amid a global glut in oil supplies that won’t go away.

Also, U.S. consumers have remained cautious about spending the money they aren’t putting into their gas tanks, which limits the benefit to the broader economy.

But Sargen says he doesn’t want to overreact, as the US economy has proven “remarkably resilient to shocks”.

Some of that likely reflected a temporary drag from warm weather, as Americans spent less on winter clothing and utilities. “It can’t last”, Chris Rupkey, chief financial analyst at MUFG Union Bank, told investors.

If the S&P 500 ends below that threshold, it would be seen as a big negative sign for the market and reflects the level of fear in the market.

Still, some are feeling it. Oil company cash flow is slowing, and companies are finding it harder to repay their loans.

Even companies posting encouraging results have been hit.

Goldman Sachs dropped 0.2 percent after reporting fourth-quarter earnings of $574 million, down 71.8 percent from the year-ago level due to a hefty charge to settle United States litigation alleging it defrauded investors on mortgage-backed securities.

Cheap oil is great for auto drivers but it’s freaking Wall Street out for many reasons.