U.S. stocks set to drop as oil sinks to $30
NEW YORK — Call it a Super Bowl hangover.
The stock market’s terrible start to 2016 is about to get
even worse with the Dow set to drop nearly 200 points on
Monday morning. Things are even bleaker for the technology-
heavy index Nasdaq, which is on track to tumble nearly 2%
and close at its lowest level since at least October 2014.
Wall Street is once again under pressure from the crash in oil
prices. Oil fell another 2% and dropped back below $30 a
barrel. Cheap oil is great for consumers but its dramatic
downfall continues to alarm investors who fear what it
signals about the health of the broader economy.
The markets are also expressing alarm about European banks.
Stock markets in Europe continue to slump badly, with
Germany’s DAX and France’s CAC 40 dropping about 2.5%
apiece.
Bespoke Investment Group noted rising “market fears over
the solvency — profitability, liquidity and stability — of the
European banking system.” The firm pointed to a huge rise in
the cost to insure European bank debt.
It’s the “kind of parabolic price action that feels like a crisis,
even if there’s no concrete evidence that one is afoot,”
Bespoke wrote.
Few stocks in the Nasdaq have anything to do with oil prices
or European banks — yet the index continues to plunge. The
index is now down more than 14% on the year, compared
with “only” 8% for the Dow. Former tech darlings Netflix and
Amazon have plummeted in 2016 as investors’ appetite for
risk continues to drop.
One of the only bright spots this year is gold, which tends to
rise during times of fear. Gold prices have soared 12% this
year, including a 2% jump on Monday to $1,185 an ounce.
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