Wall St turns negative as oil resumes downward spiral

Robust US jobs growth news provides welcome boost

 A trader works on the floor of the New York Stock Exchange on Friday  morning. US markets have declined over the past week due to market losses in China. Photograph: Andrew Burton/Getty Images

A trader works on the floor of the New York Stock Exchange on Friday morning. US markets have declined over the past week due to market losses in China. Photograph: Andrew Burton/Getty Images

 

US stocks pared gains and turned negative on Friday, weighed down by energy stocks as oil prices dipped below $33 a barrel – their lowest in more than a decade.

Oil erased earlier gains, pressured by persistent global oversupply and a bleak demand outlook. They have lost about 70 per cent since mid-2014.

Exxon and Chevron fell about 1.5 per cent weighing the most on the Dow and S&P 500.

Stocks had been higher earlier in the day as market tumult in China eased and data showed robust US jobs growth.

No-farm payrolls surged in December and unemployment rate held steady at 5 percent. October and November payrolls were revised sharply higher.

The upbeat report suggested that a recent manufacturing-led slowdown in economic growth would be temporary.

Investors have been jittery as markets got off to their worst four-day start to a year and economists slashed fourth-quarter US growth estimates.

“The market’s reaction is something between curious and concerning,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

“You are not getting that much of a lasting reaction in markets. The week has witnessed some of the most concerning phenomenon in some time. People are skittish in holding positions.”

By late morning the Dow Jones industrial average was down 44.14 points, or 0.27 per cent, at 16,469.96, the S&P 500 was down 5.5 points, or 0.28 per cent, at 1,937.59 and the Nasdaq Composite index was down 13.05 points, or 0.28 percent, at 4,676.38.

Nine of the 10 major S&P 500 sectors were lower, with the energy index’s 1.34 percent loss making it the top decliner.

Friday’s jobs report was the first since the Federal Reserve raised interest rates last month for the first time in nearly a decade, highlighting the strength of the US domestic economy.

While various Fed officials have said four rate hikes in 2016 could be possible, economists and traders are pricing in two hikes, while reducing bets on a third hike by December.

The Fed meets next on January 26-27.

China nudged the yuan higher for the first time in nine days, while traders welcomed the country’s decision to suspend a circuit breaker that halted trading twice this week.

The CSI300 index and the Shanghai Composite index both closed up 2 percent, capping off a week of tumult.

The S&P 500 index showed one new 52-week high and 57 new lows, while the Nasdaq recorded 9 new highs and 203 new lows.

- Reuters