US stocks have closed sharply lower, with the S&P 500 ending its worst week since August, as plunging crude oil prices compounded investor nervousness on expectations for the first US interest rate hike in nearly a decade.
Oil dragged down the market as a whole, as investors worried whether a weakness in commodities signalled a broader slowdown.
Investors were also worried about declines in China’s yuan and in high-yield debt markets.
Dennis Dick, head of markets structure at Bright Trading LLC in Las Vegas said, the sell-off gained ground ahead of the close as investors took profits on stocks such as Amazon.Com, which had performed well this year.
The Dow Jones industrial average fell 309.54 points, or 1.76 per cent, to 17,265.21 with every component in the index ending down. The S&P 500 lost 39.86 points, or 1.94 per cent, to 2,012.37 and the Nasdaq Composite dropped 111.71 points, or 2.21 per cent, to 4,933.47.
For the week the S&P 500 fell 3.8 per cent in its worst week since August 21. The Dow fell 3.3 per cent and Nasdaq dropped 4.1 per cent for the week.
The continued plunge in oil prices added to investor uncertainty ahead of the Federal Reserve’s expected rate hike after its December 15-16 meeting.
Brent futures fell to an almost seven-year low, while US crude futures fell to just above $35 a barrel after the International Energy Agency said it expected the supply glut to worsen in 2016 as demand slowed and OPEC showed no signs of slowing production in its fight for market share.
Adding to the sombre mood, China’s yuan fell to its lowest in 4-1/2 years on concerns about the country’s slowing economy and expectations of a US rate hike.
James of Wedbush said investors were worried about high-yield markets, especially as it related to high-yield debt and energy needs after New York-based Third Avenue Management said on Thursday it was trying to liquidate a roughly $1 billion junk bond fund in the biggest failure in the US mutual fund industry since the 2008 financial crisis.
Tracking oil prices, the S&P energy index fell 3.4 per cent, leading the decliners among major S&P sectors. The index has lost 11 per cent since the beginning of the month in its worst month since September 2011.
The materials index was down 2.7 per cent, weighed down by DuPont and Dow.
Declining issues outnumbered advancing ones on the NYSE by 2,745 to 376, for a 7.30-to-1 ratio on the downside; on the Nasdaq, 2,388 issues fell and 448 advanced for a 5.33-to-1 ratio favouring decliners.
Adobe Systems was the S&P 500’s sole new 52-week high for the day. The index had 43 new lows; the Nasdaq recorded 19 new highs and 187 new lows.
About 8.3 billion stocks traded on US exchanges compared with the 6.98 billion average for the last 20 sessions, according to Thomson Reuters data.