Dow falls triple digits; energy off 3.5% as oil gives up gains

March 8, 2016 3:56 PM0 commentsViews: 15504

NYSE Rule 48 Casts Cloud Over Big BoardU.S. stocks held lower in choppy trade Tuesday after weaker-than-expected Chinese trade data renewed concerns about global growth.

The Dow Jones industrial average traded about 100 points lower. Earlier, the index briefly fell more than 150 points in mid-morning trade, with Caterpillar (CAT) and Goldman Sachs (GS) the greatest contributor to declines.

“I think a little bit of profit-taking after the run-up that we’ve seen. We’re in a bit of a news vacuum this week. Earnings are all done. China trade data was shockingly bad. … The question keeps coming out. How bad is the slowdown in China?” said Ben Pace, chief investment officer at HPM Partners.

The S&P 500 briefly traded about 1 percent lower, as energy temporarily dipped more than 3.5 percent. U.S. crude oil futures turned lower, trading just below $37 a barrel as of 10:46 a.m. ET.

The Nasdaq composite also temporarily declined 1 percent as Apple (AAPL) and the iShares Nasdaq Biotechnology ETF (IBB) (IBB) traded lower.

“I think a little bit of profit-taking after the run-up that we’ve seen. We’re in a bit of a news vacuum this week. Earnings are all done. China trade data was shockingly bad. … The question keeps coming out. How bad is the slowdown in China?” said Ben Pace, chief investment officer at HPM Partners.

The S&P 500 briefly traded about 1 percent lower, as energy temporarily dipped more than 3.5 percent. U.S. crude oil futures turned lower, trading just below $37 a barrel as of 10:46 a.m. ET.

The Nasdaq composite also temporarily declined 1 percent as Apple (AAPL) and the iShares Nasdaq Biotechnology ETF (IBB) (IBB) traded lower.

“I do think the recession scenario is off the table but I think the equity rally we had was one … fueled by very short-term technical factors,” said Jack Ablin, chief investment officer at BMO Private Bank. “The more investors digest the data, whether economic data, corporate profits, or new data, the less they want to own U.S. large-cap stocks. U.S. equities are priced for a global expansion that is not in the cards.”

On Monday, WTI settled higher at $37.90 a barrel, its highest level of the year so far. Gains in energy stocks offset declines in tech to help the Dow Jones industrial average and S&P 500 posted their first five straight days of gains since October.

“Oil prices have picked up a lot … We seem to have found some relief from that,” Pace said. We were “near-term overbought. We needed a catalyst (for profit-taking). The catalyst was China.”

China’s exports fell 25.4 percent year-over-year in February , more than expected and the largest since May 2009, according to Reuters. The trade surplus was at $32.59 billion in February, versus analysts’ expectations of a $50.15 billion surplus.

Analysts largely attributed the sharp drop in the data to a slowdown in business activity around the early February Lunar New Year holidays, Reuters said. Exports for the first two months of the year were still down 17.8 percent and imports off 16.7 percent from the same period last year.

The data also showed China’s February crude oil imports jumped 20 percent on year to their highest ever on a daily basis, driven by import quotas and stockpiling.

In a light week for U.S. economic reports, the key news item is European Central Bank’s Thursday meeting.

“We’re expecting more stimulus from the ECB and the question is whether investors are going to see that as worries about a global slowdown or something that will propel markets higher,” said Chris Gaffney, president, EverBank World Markets.

“The euro is holding $1.10. Certainly traders don’t believe the ECB is going to do anything aggressive in terms of pursuing negative rates further,” he said.

Treasury yields traded lower, with the 2-year yield (U.S.:US2Y) at 0.86 percent and the 10-year yield (U.S.:US10Y) at 1.80 percent as of 11:03 a.m. ET.

The U.S. dollar index was a touch lower, with the euro at $1.10. The yen was at 112.50 yen against the greenback.

In mid-morning trade, the Dow Jones industrial average (Dow Jones Global Indexes: .DJI) declined 135 points, or 0.79 percent, to 16,935, with Caterpillar (CAT) the greatest decliner and Home Depot (HD) leading a few advancers.

The Dow transports traded more than 2 percent lower as JetBlue (JBLU) plunged more than 7.5 percent to lead decliners.

The S&P 500 (^GSPC) traded down 21 points, or 1.04 percent, at 1,980, with energy leading eight sectors lower and utilities and consumer staples the only advancers.

The Nasdaq (^IXIC) composite declined 47 points, or 1.01 percent, at 4,660.

The CBOE Volatility Index (VIX) (^VIX), widely considered the best gauge of fear in the market, traded near 18.5.

U.S. crude oil futures declined $1.21 to $36.69 a barrel on the New York Mercantile Exchange.

Gold futures rose $4.30 to $1,268.30 an ounce as of 10:56 a.m. ET.

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