- Stocks fell on Monday amid a spike in oil prices following a drone strike on two of Saudi Arabia’s key production facilities.
- The rally sent investors fleeing equities in favour of safe haven assets like gold and US Treasurys.
- General Motors fell as much as 5% after the United Auto Workers launched its first strike in 12 years.
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Stocks dipped on Monday as oil prices surged as much as 20% after two of Saudi Arabia’s key production facilities were hit by a drone strike.
The attack on the Saudi facility spooked traders out of equities and into the relative safety of haven assets such as precious metals and US treasuries. Silver rose 3%, while Gold gained as much as 1%.
“A large increase of oil prices can weigh on the index by negatively impacting consumer activity, but there are also positives such as energy sector profits, alleviation of high yield credit concerns, and employment tied to the sector,”Marko Kolanovic, the global head of quantitative and derivatives strategy at JP Morgan said in a note to clients on Monday.
Shares of US oil firms surged after domestic oil futures posted their largest single-day gain since January 2009. Marathon Oil rose as much as 15%, while Devon Energy gained almost 13%.
Monday’s drop came after the Dow Jones industrial average posted eight straight days of gains.
Here’s a look at the major indexes as of the 4 p.m. close on Monday:
- The S&P 500 fell 0.31%, to 2,997.96.
- The Dow Jones Industrial Average slid 0.52%, to 27,076.82.
- The Nasdaq Composite declined 0.28%, to 8,153.54.
Saudi Aramco is reportedly considering delaying its massive IPO in the wake of the attack on country’s facilities, according to a report from the Wall Street Journal. The state-run oil producer is waiting to determine how much the damage with affect its operations, the WSJ reported.
Shares of General Motors fell as much as 5% after the United Auto Workers launched its first strike in 12 years. The strike could cost the automobile manufacture $US50 million a day in earnings, Credit Suisse analyst Dan Levy said in a note to clients on Monday.
Within the S&P 500, these were the largest gainers:
And the largest decliners:
Losses in materials and consumer discretionary stock offset a 3.3% gain in the energy sector. Real estate rose 1%, while consumer staples fell 1%.
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