Stocks fell on Monday as the price of both Brent and WTI crude oil tumbled to five-year lows to start the week.
First, the scoreboard:
- Dow: 17,859, -100, (-0.5%)
- S&P 500: 2,060.1, -15.2, (-0.7%)
- Nasdaq: 4,737.4, -43.4, (-0.9%)
And now, the top stories on Monday:
1. Crude oil hit five-year lows on Monday. The price of Brent crude oil fell to $US66.22 while WTI futures fell to $US63.05 as crude resumed the plunge that really began in earnest on Thanksgiving day after OPEC declined to curb production. Meanwhile, the average price of a gallon of gas i the US fell to $US2.67 on Monday morning, according to AAA, down from $US3.27 a year ago.
2. Oil prices continue to make new lows, but the price of oil has been depressed now for months since peaking in June, and shale projects around the world are starting to feel the pinch. As Business Insider’s Shane Ferro reports, international shale projects in Argentina, China, Mexico, and Russia haven’t gotten off the ground as these projects are more capital intensive, and the current state of the oil market doesn’t make pursuing these projects economically viable.
3. And while fracking projects are facing financing pressure, oil giants ConocoPhillips and BP have also moved to cut expenses amid the drop in oil prices. ConocoPhillips announced on Monday that its projected capital expenditures budget for 2015 is down 20% from 2014, while reports over the weekend said BP would move to cut staffing levels across all of the company’s layers above operations. On Monday, shares of ConocoPhillips lost more than 4% while BP shares were down more than 2.5%.
4. As the decline in oil put the major stock indexes under pressure, “safe haven” assets like gold and Treasury bonds rallied on Monday. The price of gold spike violently during afternoon trade, quickly gaining more than $US10 an ounce to move back above $US1200. Treasury yields, meanwhile, fell on Monday with the 10-year falling back below 2.25%, an almost 10 basis point decline from its highs following Friday’s big jobs number.
5. McDonald’s reported global same-store sales that fell 2.2% in November, worse than expectations for a 1.7% decline. But the really bad news for the fast food giant came from the US, where sales fell 4.6% in November, as it has been more than a year since same-store-sales in the US were positive for McDonald’s.
6. In an afternoon email, NYSE floor governor Rich Barry gave an overview of how traders in the floor were feeling about the action in the stock market and some of the commentary floor traders are looking at. Barry wrote: “For the record, we feel that both Brent and WTI are very close to a ‘capitulation-move’ to extreme lows … Be that as it may; this morning we received an extremely Bullish note from one of the top technical analysts on the Street who loves the market in 2015. His words: ‘We currently have a large number of stocks breaking above past tops to new all-time highs. All-time highs leave just two types of sellers, shorts and profit takers, meaning stocks can accelerate to the upside. These breakouts, and neutral bullish trends are not necessarily at buy junctures, however both patterns can drive the equity markets higher quickly. Add to this the number of bullish names versus bearish names, and the odds favour we trade to the upside.’ We like the way this guy thinks, which is why we shared his views with you.”