US stocks tumble on geopolitical tensions, diving oil

GMT 13:38 2016 Thursday ,07 January

Arab Today, arab today US stocks tumble on geopolitical tensions, diving oil

US stocks
New York - XINHUA

U.S. stocks suffered big losses Wednesday, as rising geopolitical tensions and sinking oil prices weighed on investor sentiment.

The Dow Jones Industrial Average slumped 252.15 points, or 1.47 percent, to 16,906.51. The S&P 500 dropped 26.45 points, or 1.31 percent, to 1,990.26. The Nasdaq Composite Index lost 55.67 points, or 1.14 percent, to 4,835.77.

Wall Street was nervous after the Democratic People's Republic of Korea (DPRK) announced it successfully carried out its first hydrogen bomb test Wednesday.

Over the weekend, Saudi Arabia cut off diplomatic ties with Iran after angry protesters stormed its embassy in Tehran, the capital of Iran, to protest against Saudi's execution of prominent Shiite cleric Sheikh Nimr Baqir al-Nimr.

Analysts said the heightened geopolitical tensions sent traders scurrying from stocks into safe haven assets.

Also, oil prices hit their lowest level in more than 11 years Wednesday as U.S. crude output of last week increased unexpectedly, which in turn dampened market sentiment.

Dragged by plummeting oil prices, the energy sector, the biggest laggard among the S&P 500's ten sectors, slumped 3.62 percent Wednesday.

According to the minutes from Federal Reserve's December meeting, the central bank decided to raise rates for the first time in nearly a decade, though some officials expressed concerns about lingering low inflation and the stifling effects on the U.S. economy of a strong U.S. dollar and slow growth overseas.

Fed members expected economic conditions would evolve in a manner that would warrant only gradual increases in the federal funds rate, said the minutes.

Meanwhile, U.S. private companies added 257,000 jobs in December, up from 211,000 jobs in November, said the National Employment Report released jointly by Automatic Data Processing (ADP) and Moody's Analytics Wednesday. The latest ADP figure is the best monthly performance in 2015.

The goods and services deficit was 42.4 billion U.S. dollars in November, down 2.2 billion dollars from the revised level of 44.6 billion dollars in October, the U.S. Commerce Department reported Wednesday.

The CBOE Volatility Index, often referred to as Wall Street's fear gauge, increased 6.46 percent to end at 20.59 Wednesday.

In other markets, the U.S. dollar was traded mixed against most major currencies before the non-farm payrolls report of the country due Friday.

In late New York trading, the euro moved up to 1.0793 dollars from 1.0751 dollars in the previous session. The dollar bought 118.43 Japanese yen, lower than 119.04 yen of the previous session.

Gold futures on the COMEX division of the New York Mercantile Exchange rose as geopolitical instability drove investors to the precious metal.

The most active gold contract for February delivery rose 13.5 U.S. dollars, or 1.25 percent, to settle at 1,091.90 dollars per ounce.

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