Stocks finished the day deep in the red as sinking crude oil prices have investors — and economists — concerned over the negative impact of low commodity prices.
As a result, the Dow Jones Industrial Average lost 367 points, or 2.1 percent, to finish at 17,128 while the S&P 500 closed down 1.8 percent to 2,005. Retail stocks resisted the steep drops in the energy sector and shares were varied at the closing bell. Still, the S&P 500 Retailing Industry Group Index shed 1.4 percent to close at 1,268.
Some of the decliners included Coty Inc. with a 2.7 percent drop to $26.81 while Avon Products Inc. lost 4 percent to close at $3.87. Stage Stores Inc. lost 2.1 percent to close at $8.35. Gainers included Bon-Ton Stores Inc. with a 6.6 percent gain to $2.10 while the Finish Line Inc. rose 3.9 percent to $16.90. Macy’s Inc. finished the day up 1.1 percent to $34.87.
Crude oil prices closed the day down 0.9 percent to $34.62 a barrel. Earlier in the day the low oil prices as well as a strong yen against the dollar triggered a decline in stocks in Asia and Europe. The FTSE 100 in London closed down 0.8 percent to 6,052 while the German DAX fell 1.2 percent to 10,608. The CAC 400 in Paris dropped 1.1 percent to close at 4,625.
The Nikkei 225 in Japan lost 1.9 percent to close at 18,897 while the Hang Seng Index in Hong Kong closed down 0.5 percent to 21,756. The Shanghai index in China finished the day flat.
The yen rose against the dollar after the Bank of Japan announced supplemental monetary policies that included additional programs and administrative changes. IHS Global Insight analysts said it “does not see the supplement measures as significant changes in the monetary policy and foresees only limited impacts with regard to the bank’s inflation target.” The analysts went on to say that the bank’s measures “are largely intended to allow it more flexibility in its asset purchases and to ease operational difficulties, given that the prolonged slump in oil prices suggest the battle against disinflation will continue for an extended period.”
The decline in crude oil is coupled with anemic earnings growth in the entire energy sector. The S&P Energy Sector EPS Index was down 58 percent for the third quarter. As a result, retailers who had enjoyed robust sales in the shale oil and natural gas boomtowns in Western states are now seeing weakness. But for vendors, the drop in oil is likely reducing raw material costs as well as fuel oil costs throughout the supply chain.