XLE $75.47 off $2.40 (-3.08%)
WTI $61.00 down $2.82 (-4.42%)
INDU down 265 at 17,536; S&P down 35 at 2024.
From Barron's Focus on Funds:
Oil prices keep getting uglier, dragging down the broader U.S. stock market with it on Wednesday.You saw oil equities and the broader market run together yesterday when the whole thing changed direction on oil's all-too-brief rebound. Yours truly even forecast it in an otherwise wrongheaded post:
Benchmark U.S. oil futures fell below $61 a barrel for the first time in 5 1/2 years, dropping 4.5% to $60.96 in recent trading. Wednesday’s decline gouged brutal losses from already-beaten down exchange-traded funds that track stocks in the oil patch.
“The move in energy is significant and continues to be a real driver for how people are feeling about the overall market,” says Yousef Abbasi, global market strategist at JonesTrading Institutional Services, in a conversation with Barron’s on Wednesday.U.S. stocks were on course for their first steep decline since the middle of October, with the S&P 500 dropping 1.5%.
The rout in energy stocks looks to be a key factor behind Wednesday’s broad-market decline for a couple of reasons, Abbasi says. For one, managers who have suffered losses in energy stocks seem to be taking down winning positions in other sectors, such as tech and health care, he says.
“The broader picture is that you’re seeing de-risking into year end, guys closing their books, taking gains,” he says. “A lot of this is a little de-risking and winding down at the end of the year.”Big picture, oil prices are down about 43% slide since June, when oil was up over $107 a barrel. Added supply from U.S. has combined with falling industrial demand to weigh on prices. Another sign for falling demand surfaced on Wednesday: The amount of crude that U.S. refiners and traders have on hand rose, rather than fell, as was expected, reports The Wall Street Journal’s Nicole Friedman....MORE
An Upside Reversal in the Energy Stocks (XLE; ERY)
...With the Industrials down 170 and the S&P off 19 I'd expect them to turn sometime today or tomorrow and also head higher. 17,682 and 2041....That was at 9:20 ET.
The joy lasted about four hours, noon to 4:00.
