FOX Business: Capitalism Lives Here
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Stocks erased gains and closed near session lows Tuesday as concerns over the Russian economy took center stage.
Wall Street has been on a see-saw ride over the last week. The volatility can largely be attributed to a rapid pullback in global oil prices, which have fallen around 50% since June. Oil’s slump coincided with growing fears that a surge in production, driven by U.S. shale, is creating an oversupply.
On Tuesday, West Texas Intermediate crude oil erased early losses and gained two cents, rising to $55.93 a barrel. The U.S. benchmark, which is trading near its lowest level since May 2009, dropped as far as $53.60 Tuesday morning.
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Top energy names led a rebound in U.S. equities, although Wall Street eventually turned back to negative territory. The Dow was up more than 200 points in mid-morning trading.
The Energy Select Sector SPDR (XLE) ended the day 0.9% higher, a day after reaching 2014 lows. European markets also rallied to end the day on a high note, with the U.K.’s FTSE 100 closing 2.4% higher.
But international jitters returned to the front burner. New readings on manufacturing in China and Europe continued to signal slow growth, and the Russian ruble hit a new record low against the U.S. dollar. The Bank of Russia moved to increase interest rates to stem the ruble’s struggles amid weaker oil prices and economic sanctions.
A report from The Wall Street Journal published during the final half-hour of trading said banks, reacting to the ruble’s biggest retreat since 1998, are beginning to limit the flow of cash to Russian firms.
For the U.S., new reports on the housing market missed forecasts. The Commerce Department said housing starts retreated to an annualized rate of 1.028 million units in November, while the consensus estimate called for 1.040 million. Housing permits dropped to 1.035 million. Economists were looking for 1.075 million.
October housing starts were revised higher to 1.05 million, which surpassed previous forecasts.
In corporate news, Navistar (NAV) plunged 17% after the truck maker reported a surprise loss in its fiscal fourth quarter. Analysts projected a profit.
3M (MMM) provided a forecast for up to 12% earnings growth next year and raised its dividend by 20%, sending shares 1.9% higher.
RadioShack (RSH) was trading 13% lower. The beleaguered retailer named a new chief financial officer for the third time this year. Last week, RadioShack reiterated that it may need to file for bankruptcy protection.
In commodities, wholesale New York Harbor gasoline fell more than three cents to approximately $1.54 a gallon, the lowest settlement price since May 2009. Gold futures dropped $11.30, or 0.9%, at $1,196 a troy ounce.