New Lows for Oil Dragged SPY and EWU Down
SPY down 0.6%
The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P 500 Bull 3X ETF (SPXL) ended at -0.61% and -1.9%, respectively, on Monday, December 7, 2015. As the Fed’s monetary policy move became clearer to US investors in the wake of the US jobs report, the gains from Friday’s stock rally were offset by a plunge in oil prices. The new oil price lows sent US stocks into red territory as the below graph shows.
All the major sectors turned red on Monday, December 7. The rising US dollar made commodities expensive. Both the precious metals and industrial metals ended lower along with miners’ stocks. As a result, the industrial sector fell by 0.5% while the material sector fell by 1.8% on December 7.
Energy sector woes
The Organization of Petroleum Exporting Countries (or OPEC) held a quota meeting on Friday, December 4, which failed to ease the downward pressure on oil prices, as it opted to keep oil production at its current level. As a result, West Texas Intermediate (or WTI) crude dropped 5.8% on Monday to settle at $37.65 per barrel while Brent crude fell 5.3% to end up at $40.73 per barrel.
The fall in oil prices led the Energy Select Sector SPDR ETF (XLE) and the United States Oil Fund (USO) to tumble 3.8% and 5.9%, respectively, on December 7. Therefore, companies involved in oil and gas production, storage and transportation, and pipelines, suffered a major blow on the day. These included stocks of Williams (WMB), Oneok (OKE), Consol Energy (CNX), Devon Energy (DVN), and Marathon Oil (MRO). These stocks fell 13.3%, 12.8%, 15.0%, 10.1%, and 8.3%, respectively, on December 7.
In the next part, we’ll look at stocks that gained on Monday, December 7.
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