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Wall Street succumbed to heavy selling led by energy shares, sliding for the third-straight day, as commodities across the board nose dived.
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The Dow Jones Industrial Average skidded 131 points, or 1.1%, to 11,823, the S&P 500 fell 13.9 points, or 1.1%, to 1,212 and the Nasdaq Composite dipped 40 points, or 1.6%, to 2,539.
Energy stocks took a beating on the day on the back of a rout in commodities markets. However, Caterpillar (NYSE:CAT), the heavy-machinery behemoth, actually performed the worst out of the Dow components. Chevron's (NYSE:CVX) losses were amplified after Brazilian authorities asked the energy company to suspend activities in the country in the wake of an oil spill last month. Transocean (NYSE:RIG) was involved in the suit as well.
Despite the heavy selling, blue chips Pfizer (NYSE:PFE), Travelers (NYSE:TRV) and Wal-Mart (NYSE:WMT) ended higher. Verizon (NYSE:VZ) was unchanged.
The Dow has shed some 361 points, or 2.96%, in the steepest three-day decline since late last month. The broader S&P 500 has slid 3.5% over the period, while the Nasdaq is down 4.1%.
The leading crude oil contract tumbled $5.19, or 5.2%, to $94.95 a barrel -- the biggest drop since September. Crude is still up by nearly 4% for the year, but is off 5.4% in what has been a rocky trading month. Wholesale RBOB gasoline dipped 4.6% to $2.50 a gallon.
Crude inventories fell 1.93 million barrels last week according to the Energy Department, compared to an expected 2 million barrel draw. Gas stocks, meanwhile, climbed 3.82 million barrels, larger than the forecast 1.7 million-barrel build. The Organization of Petroleum Exporting Countries has agreed on a 30 billion barrel per day cap on oil output that would include all 12 members of the cartel.
Gold dropped $76.20, or 4.6%, to $1,587 a troy ounce. Gold's loss was the biggest since September and the fourth-steepest dive on record on a dollar basis. The precious metal has now shed $128.50, or 7.5%, in the past three sessions alone, and is down close to 10% for the month. However, the metal is still up 11.5% for the year.
Copper, a closely-eyed industrial metal, slid 4.6% to $3.29 a pound.
Europe Still in Focus
Headlines from Europe have been a major factor in financial markets' gloomy sentiment. Traders have been paying especially close attention to bond auctions amid worries major economies, such as Italy, the eurozone's third biggest, may end up paying painfully-high borrowing costs on the private market.
Italy sold 3 billion euro of five-year bonds at 6.47% -- a euro-era high -- and nearly 20 basis points higher than it had to pay at its last offering for the same notes. Italy has to refinance a substantial level of debt next year, and if it is unable to do so on the private markets at reasonable rates, it may require a rescue, analysts say. The country's benchmark 10-year note presently yields 7.09%, above the psychologically important 7% mark.
Also on the European front, a German consultancy trimmed its expectations of the country's 2012 economic output, raising concerns that Europe's economic powerhouse isn't immune to headwinds from the debt crisis. The Ifo institute expects the country's economy to grow at 0.4% next year, or even slower if the debt crisis gets worse, which is half the pace it forecast in October.
The euro is trading at the lowest level since January, and continuing to trend lower. The common currency recently fell 0.32% to $1.2989. The greenback, meanwhile, rose 0.59% against a basket of six world currencies. European stocks fell 2.4%.
On the economic front, import prices climbed for the first time since July in November, led by a 3.6% jump in the cost to import petroleum prices. Overall, import prices rose 0.7%, a smaller gain than the 0.9% increase economists expected, while export prices gained 0.1%, also slimmer than the 0.3% forecast. As compared to last year, import prices have soared 9.9%, while export prices have risen 4.7%.
Investors bought U.S. Treasuries, knocking yields lower. The benchmark 10-year note yields 1.908% from 1.969%.
European blue chips fell 2.4%, the English FTSE 100 dipped 2.3% to 5,367 and the German DAX fell 1.7% to 5,675.
In Asia, the Japanese Nikkei 225 slipped 0.39% to 8,519 and the Chinese Hang Seng slumped 0.5% to 5,696.