Stocks open lower as weak oil prices push energy sector down

AP News
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Posted: Feb 24, 2016 9:44 AM
Stocks open lower as weak oil prices push energy sector down

NEW YORK (AP) — Stocks are opening lower on Wall Street, led by declines in energy companies and banks as commodity prices fall.

Rig operator Transocean sank 8 percent in the first few minutes of trading Wednesday. Miner Freeport-McMoran slumped 7 percent.

The Dow Jones industrial average dropped 181 points, or 1.1 percent, to 16,250.

The Standard & Poor's 500 index fell 21 points, or 1.1 percent, to 1,899. The Nasdaq composite gave up 55 points, or 1.2 percent, to 4,448.

The price of oil sank 4 percent to $30 a barrel in New York.

Bond prices rose. The yield on the 10-year Treasury note fell to 1.68 percent.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

World stocks turned lower on Wednesday, as sliding oil prices and fresh signs of global economic weakness weighed on investor sentiment.

KEEPING SCORE: In Europe, France's CAC 40 dropped 2.1 percent to 4,147.76 and Germany's DAX shed 2.4 percent to 9,192.89. Britain's FTSE 100 dropped 1.6 percent to 5,870.11. U.S. stocks were poised for a weak open. Dow futures were down 0.9 percent and the broader S&P 500 futures were down 0.8 percent.

CRUDE CONCERNS: Saudi Arabia's oil minister, Ali Al-Naimi, told a meeting of energy leaders in Houston on Monday that output cuts aimed at boosting slumping crude prices won't work. He said that the market should instead let some operators go out of business. Crude oil tumbled more than 4 percent. The long-term drop in oil prices, which are hovering around $30 a barrel after falling from over $100 in mid-2014, has sliced into profits at energy companies. It's also now starting to hurt income at big U.S. banks as higher-cost producers struggle to repay loans taken out during the boom.

ANALYST INSIGHT: "The disappearance of risk appetite after last week's positive performance can be traced to bad news around oil once again," said Bernard Aw, market strategist at IG.

GLOBAL ECONOMY: Worries about the world economy are also weighing on investors' minds. Singapore and Hong Kong both reported Wednesday that growth slowed last year and that their governments forecast further weakness for 2016 on softer global demand for their exports and services. Meanwhile, China's currency slipped as the central bank guided its exchange rate lower for the second straight day.

ENERGY: Benchmark U.S. crude futures skidded $1.15 to $30.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.52 on Monday. Brent crude, which is used to price oils internationally, fell 82 cents to $33.15 a barrel in London.

ASIAN SCORECARD: Japan's benchmark Nikkei 225 index lost 0.9 percent to finish at 15,915.79 as investors seeking haven in the yen pushed it higher, hurting shares of the country's big exporters. South Korea's Kospi edged 0.1 percent lower to end at 1,912.53, and Hong Kong's Hang Seng fell 1.1 percent to 19,192.45. The Shanghai Composite Index in mainland China rose 0.9 percent to finish at 2,928.90. Australia's S&P/ASX 200 slid 2.1 percent to 4,875.00. Benchmarks in Taiwan, Singapore, Malaysia and the Philippines also fell.

CURRENCIES: The dollar fell to 111.82 yen from 111.97 yen in the previous day's trading. The euro weakened to $1.0965 from $1.1018.