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US stocks tumble as oil shares suffer

Jan 07 2016 09:23

New York - US stocks tumbled with petroleum-linked stocks falling especially hard on more signs of a Chinese economic slowdown and a North Korean announcement that it completed a hydrogen bomb test.

The Dow Jones Industrial Average fell 252.15 points (1.47%) to 16 906.51.

The broad-based S&P 500 dropped 26.45 (1.31%) to 1 990.26, while the tech-rich Nasdaq Composite Index shed 55.67 (1.14%) at 4 835.76.

US equities were in the red the entire session as the Chinese central bank cut the value of the yuan against the US dollar to its lowest level since April 2011, reflecting a weakening economic outlook.

North Korea asserted that the "republic's first hydrogen bomb test," meant it had "joined the rank of advanced nuclear states," as North Korean state television put it. Some nuclear analysts expressed scepticism at the claim.

But the North Korean move added to anxiety in the wake of a festering conflict between Saudi Arabia and Iran that surfaced earlier this week.

"The saber rattling in North Korea seems to have caught investors' attention," said Jack Ablin, chief investment officer at BMO Private Bank.

"It's definitely a noxious blend of economic and geopolitical uncertainties."

Petroleum-linked stocks dived on a steep fall in oil prices. Dow member Chevron lost 4.0% while smaller oil producers Apache and Anadarko Petroleum slumped 11.5% and 9.8%, respectively.

Netflix defied the market's gravitational pull lower, surging 9.3% following a dramatic announcement at the Consumer Electronics Show in Las Vegas that it had launched in 130 new markets, including India.

"Today you are witnessing the birth of a new global Internet TV network," Netflix co-founder and chief executive Reed Hastings told the gathering.

Apple fell 2.0% following reports that it is scaling back production of its iPhones.

Chipotle Mexican Grill dropped 5.0% as it reported sharply lower sales following food-safety problems at restaurants. The casual-food chain also said it had received a federal grand jury subpoena in conjunction with a criminal probe into an August 2015 norovirus outbreak in a California restaurant.

Monsanto shed 1.6% as it announced it would cut an additional 1 000 jobs in response to weak agricultural demand. The US agricultural giant, which reported a loss of $253m in its first fiscal quarter, now expects to cut 3 600 jobs instead of 2 600.

equities  |  markets  |  us stocks
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