Stocks tumble on worries about the Fed and economic growth
U.S. stocks abruptly changed course again Tuesday, taking large losses. Investors worried about the possibility of a weaker global economy and tried to anticipate the Federal Reserve’s plans for interest rates. Energy companies fell with the price of oil after a leading industry group said demand for oil is down more than it previously thought.
Stocks sank in the first few hours of trading and never regained their footing. The price of oil fell 3% after the International Energy Agency’s remarks about oil demand. The group expects weaker growth because of a more pronounced slowdown in the global economy.
Bond yields jumped, and phone companies dropped. Apple was one of the few bright spots after T-Mobile said preorders for Apple’s newest iPhones are strong.
After two months of unusual calm on the markets, stocks have whipsawed in the past few days. They plunged Friday, then recovered about half those losses Monday, only to drop lower Tuesday. Confusion over the Fed’s intentions has been a major factor.
Randy Frederick, vice president of trading and derivatives at Charles Schwab, said that investors don’t know what the Fed will do at its meeting next Tuesday and Wednesday and that the market may remain volatile until then.
“Some of the things they said Friday scared people,” he said. “Monday, they tried to calm them down. Now they’re in a quiet period, so we don’t know what they’re thinking.”
The Dow Jones industrial average sank 258.32 points, or 1.4%, to 18,066.75. The Standard & Poor’s 500 index dropped 32.02 points, or 1.5%, to 2,127.02. The Nasdaq composite fell 56.63 points, or 1.1%, to 5,155.25.
The International Energy Agency, which represents 29 oil-producing countries, is predicting slower growth in demand for oil because of a more pronounced economic slowdown during the third quarter of the year, among other factors. The price of oil has plunged over the last two years as an enormous supply glut built up while growth in demand slowed.
Investors have been worried about a possible slowdown in economic growth. Those fears were a big reason stocks tumbled in January and early February.
U.S. crude fell $1.39, or 3%, to $44.90 a barrel. Brent crude, the benchmark for international oil prices, slid $1.22, or 2.5%, to $47.10 a barrel.
Exxon Mobil shares sank 2.4% to $85.21, and Marathon Oil stock tumbled 7.3% to $14.34.
Anadarko Petroleum agreed to pay $2 billion to buy Freeport-McMoRan’s deepwater assets in the Gulf of Mexico. Activist investor Carl Icahn, who bought a stake in Freeport-McMoRan last year, has pushed the company to spin off its oil and gas business so it can focus on copper mining. Anadarko stock slipped 0.3% to $57.59, and Freeport-McMoRan slumped 8.4% to $10.15.
Of the 30 stocks on the Dow average, only Apple traded higher. It rose 2.4% to $107.95 after T-Mobile said preorders for the company’s newest iPhones, introduced last week, are the strongest it has seen so far.
U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 1.73% from 1.67%. The yield on the 30-year Treasury bond also jumped. Both yields are the highest they’ve been since late June, right before Britain voted to leave the European Union.
Only 20 stocks in the S&P 500 index traded higher. Some of the largest losses went to phone companies, which sank as higher bond yields made them less appealing as income-producing investments. Verizon sank 2.1% to $51.45. AT&T fell 1.8% to $39.97.
Among the few gainers was chipmaker Intersil, which agreed to be bought by Renesas of Japan. Renesas’ offer values the Milpitas, Calif., firm at $22.50 per share, or $3.05 billion. Intersil shares jumped 9.8% to $21.70.
Weight Watchers International fell 6.6% to $9.68 after the weight loss company said Chief Executive James Chambers will step down at the end of the month. Weight Watchers shares more than doubled after the company announced an alliance with Oprah Winfrey, who bought a 10% stake and joined the company’s board of directors. The stock has given up some of its gains lately.
In other energy trading, wholesale gasoline fell 1 cent to $1.38 a gallon. Heating oil fell 2 cents to $1.42 a gallon. Natural gas fell 1 cent to $2.91 per 1,000 cubic feet.
Gold slipped $1.90 to $1,323.70 an ounce. Silver fell 3 cents to $18.98 an ounce. Copper held steady at $2.10 a pound.
The dollar rose to 102.72 yen from 101.84 yen. The euro fell to $1.1208 from $1.1241.
Germany’s DAX lost 0.4% while France’s CAC-40 slipped 1.2%. The FTSE 100 index of leading British shares was down 0.5%. Asian stocks mostly rallied.
ALSO
Column: Credit card agreements are profiles in gibberish
Chevy Bolt EV range is 238 miles: Prime time for the electric car?
Wells Fargo is eliminating some sales goals after settlement over aggressive sales tactics
UPDATES:
2:15 p.m.: This article was updated with closing prices and additional information.
This article was originally published at 8 a.m.
