Energy Sector Pulls Down Stocks 08/03 17:43
Another bad day for the energy sector pulled down stocks on Monday.
NEW YORK (AP) -- Another bad day for the energy sector pulled down stocks on
Energy stocks slumped as the price of oil dropped to its lowest in more than
four months. Oil has fallen sharply since the end of June on evidence that a
global supply glut is building at the same time demand appears to be slowing.
The energy sector is down 15 percent this year, making it easily the worst
performing industry group in the S&P 500 index. Earnings at energy companies
have dropped almost 60 percent in the second quarter.
"Certainly, oil production has been strong globally," said Serena Vinton, a
portfolio manager at Franklin Templeton. "And with some of the global economic
concerns and strong global production, it creates a nervous environment for
The Standard & Poor's 500 index dropped 5.80 points, or 0.3 percent, to
2,098.04. The Dow Jones industrial average fell 91.66 points, or 0.5 percent,
to 17,598.20. The Nasdaq composite slipped 12.90 points, or 0.3 percent, to
Benchmark U.S. crude fell $1.95, or 4.1 percent, to close at $45.17 a barrel
in New York. U.S. crude has been sliding since reaching a high this year of
$61.43 a barrel on June 10.
Overall, stocks have been in the doldrums since the S&P 500 closed at an
all-time high of 2,130 on May 21. Short sell-offs have been followed by short
rallies as investors have weighed signs of an improving U.S. economy against
signs of weakening growth overseas.
Among individual stocks, Tyson Foods was the biggest loser in the S&P 500
index Monday. The meat producer slumped $4.39, or 9.9 percent, to $39.96 after
cutting its outlook for fiscal 2015 earnings.
The company, which owns the Jimmy Dean breakfast sausage brand, blamed
conditions in the beef market for its woes, citing high cattle costs and
"export issues" as factors that were hurting its profits.
Michael Kors was another big loser, dropping $3.28, or 7.8 percent, to
$38.71 amid concern that demand for the luxury fashion retailer's handbags is
dropping off. Analysts at investment bank Canaccord cut their price target on
the stock ahead of the company's latest earnings report due out Thursday.
In Europe, Greece's stock market sank 16 percent as it reopened from a
month-long shutdown brought on by the near collapse of the country's financial
system during its high-wire bailout negotiations.
Two surveys published Monday showed the damage caused to the Greek economy
in July by the bank closures, money controls and uncertainty over the country's
A gauge of manufacturing in Greece plummeted in July to the lowest reading
ever recorded, despite improvements across the rest of the 19-country eurozone.
A separate survey showed that business and consumer confidence fell for a fifth
consecutive month in July to its worst level since October 2012.
"The fundamentals of the country are still so weak and so uncertain," Jorge
Mariscal, regional chief investment officer for emerging markets at UBS Wealth
Management. "Clearly, the market is trading these assets as what they are,
Even after reaching the basis of a deal with its creditors, Greece still has
to demonstrate that it can deliver on its pledges for reform, he said.
Investors also got an update on how the U.S. economy is doing.
U.S. factories were a little less busy last month. The Institute of
Purchasing Managers' manufacturing index slipped to 52.7 from 53.5 in June.
Economists had expected the index to remain unchanged. Any reading above 50
Investors are following this month's economic reports closely to see if the
economy is strengthening sufficiently for the Federal Reserve to raise interest
rates later this year.