Economy

Purveyor

(29,876 posts) Fri Dec 11, 2015, 01:47 PM Dec 2015

Dow Off 300 As U.S. Oil Under $36 A Barrel

Ed Brackett and Matt Krantz, USA TODAY 12:37 p.m. EST December 11, 2015

Stocks are nosediving Friday as oil prices continue to set seven-year lows and investors brace for the increasing certainty that the Federal Reserve will boost short-term interest rates next week.

The Dow Jones industrial average is down 307 points, or 1.7%, to 17,269 at 12:30 p.m. ET as Goldman Sachs (GS) and DuPont (DD) were the biggest decliners. The Standard & Poor's 500 is down 1.8% to 2014. And the Nasdaq composite index is down 2.0% to 4945 -- the first time it has been below 5000 in nearly a month.

DuPont shares are down $3.87, or 5.2%, to $70.68 as investors react to the $68.6 billion buyout by Dow Chemical, which is the fifth largest deal of the year, says Dealogic. Goldman Sachs is off $4.10, or 2.3% to $178.01 as investors in the financial sector prepare for higher short-term interest rates.

Investors are also reading into the selloff in oil prices as a harbinger of weak economic demand. A barrel of U.S. oil is down more than 2% to under $36. Weak oil prices are also hammering the profits of energy companies, which are a big component of the S&P 500 companies' total profits.

The junk bond market is also unnerving investors. Worries about falling prices of high-yield debt is raising another concern for investors. The SPDR Barclays High Yield Bond exchange-traded fund is down 2.1% Friday.

more...

http://www.usatoday.com/story/money/markets/2015/12/11/stocks-friday/77139690/

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Dow Off 300 As U.S. Oil Under $36 A Barrel (Original Post) Purveyor Dec 2015 OP

OK - I'm Confused Here..... global1 Dec 2015 #1

Oil barons would seem to be yanking money out of the stock market Warpy Dec 2015 #2

global1

(25,263 posts)

1. OK - I'm Confused Here.....

Reply to Purveyor (Original post)

Fri Dec 11, 2015, 02:43 PM

Dec 2015

We are making great strides in alternative energies. We are trying to wean ourselves off of oil as much as possible. The price of a barrel of oil is dropping - so in many ways it looks like we are succeeding here. Gas prices are at their low making it more affordable to fill up you gas tank and have extra money in you budget to spend - that in my mind boosts the economy.

So why is the stock market tanking? Is it dependent on high oil prices to go up? Is this what we will have to look forward to as alternative energies even become more prominent?

I would think all the industries that rely on oil for their existence would benefit from the dropping oil prices. Cheaper to transport people and goods across the country by truck, rail, plane. Plastics that rely on oil would seem to become cheaper to produce.

So what gives here - what am I missing?

Warpy

(111,316 posts)

2. Oil barons would seem to be yanking money out of the stock market

Reply to global1 (Reply #1)

Fri Dec 11, 2015, 06:37 PM

Dec 2015

to try to shore up the price of spot market futures in oil. It's an old game and usually a futile one, except that the 0.1% have gotten so incredibly wealthy that they can affect both markets by their actions.

And if you're not frightened by that, perhaps you should be. Wait until they try to shore up tottering derivatives markets with stock market money.

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