PANIC: U.S. Stocks Lose Sense of Humor

The decline in oil prices has proved a mixed blessing for stocks in recent months. Though it has led to lower gasoline prices and boosted the fortunes of ordinary consumers, the slide has also curbed profits within the once-booming energy sector, which makes up a growing piece of the U.S. economy amid resurgent domestic oil production.

The Dow industrials tumbled more than 300 points Monday, kicking off the new year on a sour note as a renewed slide in oil prices sent energy shares sharply lower.

The Dow Jones Industrial Average fell 329 points, or 1.9%, to 17504 in late afternoon trading. The S&P 500 index slid 37 points, or 1.8%, to 2021.

“Oil is first and foremost on everybody’s mind. People are thinking if it’s going to $40, where does that leave the economy?”

— Jesse Lubarsky, senior vice president and equity trader at Raymond James in New York

The Nasdaq Composite Index declined 73 points, or 1.6%, to 4654.

Monday’s losses began at the opening bell and picked up steam as oil prices plumbed new lows, with beleaguered shares of energy companies leading the push lower. U.S. oil prices fell below $50 a barrel for the first time in nearly six years Monday, sending shares of S&P 500 energy companies tumbling nearly 4%.

The euro tumbled to a nine-year low Monday as new worries flared over Greece, where a woman in Athens passed a currency-changing business. Associated Press

“It seems like everyone is taking a step back instead of running into the new year,” said Viren Chandrasoma, managing director of equity trading at Credit Suisse . “There hasn’t been a real buying-on-the-dip mentality today.”

The decline in oil prices has proved a mixed blessing for stocks in recent months. Though it has led to lower gasoline prices and boosted the fortunes of ordinary consumers, the slide has also curbed profits within the once-booming energy sector, which makes up a growing piece of the U.S. economy amid resurgent domestic oil production.

“Oil is first and foremost on everybody’s mind,” said Jesse Lubarsky, senior vice president and equity trader at Raymond James in New York. “People are thinking if it’s going to $40, where does that leave the economy?”

Despite Monday’s rout, Wall Street trading desks said activity was relatively light given the scale of the move lower. Rather than sell en masse, many investors started the new year with a more cautious posture following double-digit gains in major indexes last year. Read the rest of this entry »