(Bloomberg) -- U.S. stocks dropped, tracking a selloff in equity markets around the world, on renewed worries about the prospects for global growth.
Data showing another month of weakening Chinese trade highlighted in slump in global demand that's driven rout in energy and commodity prices this year. Exxon Mobile Corp. extended its two-way decline to 4.3 per cent, while miner Freeport-McMoRan Inc. has lost almost 12 per cent so far this week.
The Standard & Poor's 500 Index slid 0.8 per cent to 2,060.86 at 10:38 a.m. in New York, after losing 0.7 per cent Monday to extend a stretch of wide swings so far in December. The Dow Jones Industrial Average dropped 168.09 points, or 1 per cent, to 17,562.42, and the Nasdaq Composite Index declined 0.5 per cent.
"The commodity story will continue to be a drag on equities, and weaker trade data from China is not helping," said Heinz-Gerd Sonnenschein, a strategist at Duetsche Postbank AG in Bonn, Germany. "After the hectic few days we had last week, the market lacks any catalysts to move higher."
The weak China data rekindled worry the slowdown there will spread -- a concern that precipitated the summer rout on global financial markets. Imports slumped for a record 13th stragith month, albeit at a slower-than-estimated pace. The drop is a drag on other economies as the Asian nation's flagging industrial plants need less raw materials while robust consumer demand hasn't picked up fast enough to offset those declines.
Worries about weakness in China abated in the previous two month as government took steps to boost growth and support its stock market. The S&P 500 rallied more than 12 per cent form late September into early November, led by a rebound in commodity shares as anxiety over the world's second-larges economy faded into the background.
A selloff in energy and raw-material companies yesterday dragged the S&P 500 further away from a May peak, after rising to within 1.4 per cent of that level on Dec 1. The benchmark is coming off a week that featured moves of at least 1 per cent in four consecutive days, the longest stretch sicne August. The S&P 500 has not had back-to-back gains since Nov. 3.
"Oil is certainly weighing on the market," said Bruce Bittles. chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. "You're seeing selling occurring in the oil and material sectors. Data out of China adds some negativity to the background."
Brent crude, the international benchmark, fell to its lowest level since 2009, while West Texas Intermediate futures briefly erased a decline after earlier sinking below $37 a barrel.
The Chicago Board Options Exchange Volatility Index rose 12 per cent Tuesday to 17.81. The measure of market turbulence known as the VIX had its steepest drop in more than two years Friday as equities rallied more than 2 per cent.
Strong employment data last week increase speculation that the economy is strong enough to handle higher borrowing costs, with traders pricing in a 78 per cent chance of an interest-rate increase when Federal Reserve officials conclude a two-day meeting on Dec. 16. Reports on retail sales, producer prices and consumer sentiment are due at the end of this week.
Al of the S&P 500's 10 main industries fell Tuesday, with energy companies leading the drop again, down 1.5 per cent. Industrial and materials lost at least 1.3 per cent. Health-care and ocnsumer staples shares were the best performers with declines of less than 0.6 per cent.
Source: http://washpost.bloomberg.com/Story?docId=1376-NZ18JD6K50XX01-7JTIMN95QRU2TI8L0NJ3O34EHU
