Wall Street skids as global growth worries resurface

July 5, 2016 12:25 PM

Wall Street extended losses in early afternoon trading today as crude oil prices slipped further and tepid U.S. data added to global growth worries.

Oil prices were down nearly 5% as a potential economic slowdown weighed on prospects of demand. 

Shares of oil major Exxon was down 1.4% as the S&P energy sector led the decliners with a 2.28% fall.

Adding to the dour mood, data showed new orders for U.S. factory goods fell in May on weak demand for transportation and defense capital goods.

The Commerce Department said new orders for manufactured goods declined 1.0% after two straight months of increases.

"People are going to be cautious. They are still keeping an eye on the UK and probably don't want to over commit here," said John Callany, chief economic strategist at LPL Financial in Boston.

"There is also some catch up that's happening because our markets were closed yesterday and people need to readjust with the jobs report right around the corner."

At 12:42 p.m. ET, the Dow Jones industrial average was down 122.62 points, or 0.68%, at 17,826.75, the S&P 500 was down 17.28 points, or 0.82%, at 2,085.67 and the Nasdaq Composite was down 50.11 points, or 1.03%, at 4,812.46.

The S&P 500 had briefly recovered from a session low after FBI Director James Comey said no reasonable prosecutor would bring a case against presumptive Democratic presidential nominee Hillary Clinton for her use of a private email server while secretary of state.

Seven of the 10 major S&P sectors were lower. The materials sector fell 1.65%.

The financial sector, which is heavily exposed to UK markets, was down 1.56% with JPMorgan, Wells Fargo and Citigroup fell between 1.7-3.3%.

The utilities index, a safe-haven index, jumped to an all-time high, before paring some gains to trade 0.47% higher. 

Investors have been seeking safe-haven assets in an uncertain economic environment. U.S. government bond yields were at an all-time low as weak data from China added to the nervousness stemming from Britain's vote to leave the European Union.

Data from China showed that the country's services sector activity rose to an 11-month high in June, but a composite measure of activity including manufacturing fell to its lowest in four months.

The Bank of England said the outlook for UK's financial stability post-Brexit was "challenging" and said it would lower the amount of capital that banks were required to hold in reserve in order to allow them to keep lending.

Tesla's shares fell 3.3% to $209.40 after the electric car maker missed vehicle deliveries target for the second consecutive quarter.

Netflix rose as much as 4.8% to $101.27 after it reached an agreement with Comcast for its services to be available on the cable company's set-top box. Comcast was down 0.6% at $64.87.

Declining issues outnumbered advancing ones on the NYSE by 2,304 to 675. On the Nasdaq, 2,082 issues fell and 667 advanced.

The S&P 500 index showed 63 new 52-week highs and one new low, while the Nasdaq recorded 57 new highs and 23 new lows.

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