Wall Street Sees Red Amid Collapse in Oil Prices

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Wall Street posted heavy losses Friday in response to an ongoing oil slump that is pressuring energy stocks.

Today’s Markets

The Dow Jones Industrial Average shed 315 points, or 1.8%, to 17280. The S&P 500 fell 33 points, or 1.6%, to 2002. The Nasdaq lost 54.6 points, or 1.2%, to 4653.

The heavy losses pushed the Dow to a 3.7% loss for the week, the blue-chip index’s worst performance in more than three years. It was also Wall Street’s first week in the red since October.

U.S. equities have come under the weight of a rapid selloff in global oil prices. West Texas Intermediate crude oil fell 5% Wednesday before dropping below $60 a barrel a day later. As a result of oil’s retreat, energy stocks have suffered. The S&P 500 energy index is down about 4.9% since the start of the month.

On Friday, WTI oil declined $2.14, more than 3%, to $57.81 a barrel. The U.S. benchmark reached its lowest intraday price since May 2009 after the International Energy Agency cut its oil demand forecast for the fourth time in five months.

Citing lower fuel consumption in Russia and other oil producing countries, the Paris-based group now expects global oil demand of 93.3 million barrels a day in 2015, down 230,000 barrels from the IEA’s previous estimate.

Meanwhile, traders got some good news from the University of Michigan’s report on consumer sentiment. A preliminary reading of consumer sentiment in December checked in at 93.8, surpassing November’s reading of 88.8. Economists were looking for 89.5.

The producer-price index decreased 0.2% last month, a bit steeper than expectations of a 0.1% drop. Excluding food and energy costs, producer prices remained level. The consensus estimate called for 0.1% growth.

Michael Block, chief strategist at Rhino Trading Partners, said he’s watching the S&P futures contract for a possible move below a round number of 2000.

“We saw how that worked in crude yesterday,” Block wrote in a note to clients, referring to how equities reacted to sub-$60 oil.

In corporate news, Adobe Systems (NASDAQ:ADBE) rose 9% after reporting quarterly earnings that beat expectations.

GoPro (NASDAQ:GPRO) rallied as much as 4% but later lost momentum from an upgrade by J.P. Morgan.

Cheaper oil may give a boost to Delta Air Lines (NYSE:DAL), which said lower fuel prices could add to the carrier’s bottom line next year. However, the company may need to write off $1.2 billion tied to fuel hedging. Shares fell 1.3%.

Elsewhere in commodities, wholesale New York Harbor gasoline fell more than two cents to just under $1.60 a gallon. Gold futures were down $3.50 at $1,222 a troy ounce.