U.S. equity markets suffered their largest point declines in more than three years last week, as investors, spooked by oil’s decline, went on a broad-based selling-spree. The Dow Jones Industrial Average gave back 678 points, and dropped more than 100 points in the last 30 minutes of trading on Friday.

The Dow dropped 678 points, or 3.8%, last week, to 17,280.83, its largest point and percentage drop since 2011. The Standard & Poor’s 500 index 500 fell 73 points to 2002.33, its largest point drop since 2011 and largest percentage drop since 2012. The tumble came after seven consecutive weeks of gains. The Nasdaq Composite index fell 127 points, or 2.7%, to 4653.6.

European markets also plunged, with major indexes including the FTSE 100 and the DAX registering their largest losses since 2011. Oil led the market lower, with crude futures dropping $8.03 per barrel, or 12.2%, to $57.81, the lowest price it has settled at since May 2009. Oil hit its 52-week high of $107.26 in June, and has since fallen 46%—24% just in the past three weeks.

Oil bulls got bad news on both the supply and demand fronts. The International Energy Agency cut its estimate for oil demand growth Friday. Saudi Arabia’s oil minister said Thursday he had no intentions of cutting production amid the recent price plunge, adding to oil’s skid. “The story for crude remains the same—slower global growth, excess supply, and an unwillingness of OPEC and others to cut production as they continue to vie for market share,” wrote Yousef Abbasi, the global market strategist at JonesTrading.

(Source: Barrons Online)

The stock market edged up last week, with the Dow Jones Industrial Average eking out a record high. Thanks to the continuing plunge in crude oil prices, which intensified Friday, shares of groups aided by declining fuel costs—airlines, hotels, and retail, among others — soared in a light-trading, holiday-shortened week.

On Friday alone, consumer discretionary stocks rose 1.2% while the energy index sank 6%, reflecting a wholesale exit from the sector. That weakness worsened late Friday and prevented the broad market from closing the week at an all-time high.

The outsize moves came in the aftermath of OPEC’s decision not to cut oil output, on Thursday when financial markets were closed in the U.S. for Thanksgiving Day. That sent West Texas Intermediate crude to $66.15 per barrel, down 13.5% on the week and the lowest in over five years.

Last week, the Dow Jones Industrial Average added 18 points, or 0.1%, to 17,828.24, a record close. The Standard & Poor’s 500 index rose 4 to 2067.56, off slightly from the high set Wednesday. The Nasdaq Composite index rose 79, or 1.7%, to 4791.63.

Friday’s low trading activity could have accentuated market moves and might not be a good lens on the coming week. As Paul Nolte, a money manager at Kingsview Asset Management, notes, “There were all of six people trading Friday after the holiday.”

The oil price slide is a net positive for the consumer and U.S. stocks, but it will probably weigh on S&P 500 index fourth-quarter earnings reports through weakness in energy company profits, notes Michael Mullaney, chief investment officer at Fiduciary Trust in Boston. Overseas economies, particularly emerging markets that export oil, might get hurt, too, he adds.

Emerging market stocks plunged 2% Friday, a signal of investor worry about global growth. Jack Ablin, CIO of BMO Private Bank, observes that slowing demand is “a growing part of the reason” for the oil price drop, in addition to the world’s oversupply of black gold.

The U.S. economic news last week was generally mixed but didn’t dent the idea that the U.S. economy is improving. Third-quarter U.S. gross domestic product was revised to 3.9% at an annual rate from 3.5%, well above the 3.3% consensus.

Energy prices will probably be weak at least into the first half of 2015, and the big drop so far is probably curtailing the U.S. shale revolution already. U.S. oil-field production was down 500,000 barrels per day to 9.4 million from Sept. 12 to Nov. 14, according to Yardeni Research.

The S&P 500 index, up 12% this year, has not yet recorded a drop of four consecutive days, according to Bespoke Investment Group, the longest such streak in any calendar year. The previous longest was in 1997, when trading went until Aug. 26 before hitting a string of four down days.

(Source: Barrons Online)