U.S. stocks sink on jitters over North Korea and China
U.S. stocks dropped Wednesday as investors fretted about signs of belligerence from North Korea and more weakening of China’s economy, which pummeled energy companies.
The Dow Jones industrial average dropped 238 points, or 1.4%, to 16,920 as of 10:05 a.m. Eastern time. The Standard & Poor’s 500 index slid 26 points, or 1.3%, to 1,990. The S&P 500 hasn’t closed below 2,000 since Oct. 14. All 10 industrial sectors of the S&P 500 are falling. The Nasdaq gave up 61 points, or 1.2%, to 4,830.
NORTH KOREA: The government of North Korea announced that it had conducted its first successful test of a hydrogen bomb, but the claim was met with widespread skepticism. North Korea has tested several nuclear devices but has not shown the capability to make a hydrogen bomb.
CHINA CONCERNS: A monthly survey of China’s service industries slipped to a 17-month low, renewing fears that the second-largest economy in the world was stumbling. Service industries have helped offset weakness in trade and investment in China, but the survey shows that boost could be fading.
COMMODITIES: The signs of weakness in China, a major consumer of energy, pummeled oil prices. Brent crude, a benchmark for international oils, fell $1.52, or 4.2%, to $34.90 a barrel in London. U.S. benchmark crude sank $1.26, or 3.5%, to $34.71 a barrel in New York. The price of wholesale gasoline sank 5% and heating oil tumbled 3%.
ENERGY AND METALS: Energy stocks fell with those prices. Marathon Oil declined 96 cents, or 7.6%, to $11.80 and Murphy Oil shed $1.69, or 7.5%, to $20.90. Consol Energy lost 86 cents, or 10.1%, to $7.67 and Apache fell $3, or 6.9%, to $40.53.
PUMP THE BRAKES: Auto retailer AutoNation said it had to offer large discounts in December, especially on luxury vehicles. The company said it will report smaller profits per vehicle in the fourth quarter. The stock dropped $5.73, or 10.1%, to $51.01.
OVERSEAS: France’s CAC 40 shed 1.5% and Germany’s DAX dropped 1.6%. Britain’s FTSE 100 lost 1.5%. Japan’s Nikkei 225 index lost 1% and South Korea’s Kospi fell 0.3%. Hong Kong’s Hang Seng shed 1%. The Shanghai Composite Index in mainland China rebounded 2.3%, however, as the Chinese government said it will keep some market-stabilizing measures in place.
BONDS AND CURRENCY: Bond prices rose. The yield on the 10-year Treasury note fell to 2.19% from 2.24%. The euro edged up to $1.0752 from $1.0744. The dollar fell to 118.64 yen from 118.97 yen late Tuesday.
