Stock Market News for December 11, 2014 – Zacks Investment …

Benchmarks suffered their biggest drop in two months on Wednesday after a slump in oil prices dragged energy shares down. Oil prices took a beating after OPEC lowered its oil production forecast for 2015. The S&P 500 registered its worst one-day percentage decline since Oct 13. All 10 sectors of the S&P 500 index also posted a decline of more than 1%. The Dow too recorded its biggest decline since Oct 9.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) declined 1.5% or 268 points to close at 17,533.15. The Standard & Poor 500 (S&P 500) decreased 1.6% to close at 2,026.14. The tech-laden Nasdaq Composite Index closed at 4,684.03; losing 1.7%. The fear-gauge CBOE Volatility Index (VIX) surged 24.5% to settle at 18.53, its biggest one-day percentage gain since Jul 31. A total of about 7.4 billion shares were traded on Wednesday, more than last five-session average of 6.7 billion. Decliners outpaced advancing stocks on the NYSE. For 81% stocks that declined, 17% advanced.

Oil prices touched a new five-year low on Wednesday. The West Texas Intermediate (WTI) crude oil price dropped 4.7% to $60.94 per barrel. Additionally, price of Brent crude oil slipped 4.1% to settle at $64.24 per barrel. Oil prices plunged after the Organization of Petroleum Exporting Countries (OPEC) slashed its demand for oil estimates in the next year due to abundant North American output and rise in other producers. OPEC predicts demand for its oil in 2015 to be at 28.9 million barrels a day, less than 29.4 million barrels a day in 2014.

OPEC also declared that its collective crude oil production for November was 30.05 million barrels a day, less than 390,100 barrels a day when compared to the previous month. Further, OPEC-member Saudi Arabia’s output for the month of November dropped 60,100 barrels a day to 9.59 million barrels a day.

Drop in oil prices raised concerns among investors of a possible slowdown in global economy. Further, it raised concerns that small exploration and production companies might get hampered. The S&P SmallCap 600 Capped Energy (sector) Index is down 41.7% year-to-date. Key energy stocks were also hit hard due to plunge in oil prices. Exxon Mobil Corporation (XOM – Analyst Report) and Chevron Corporation (CVX – Analyst Report) were among the top decliners among the Dow components. Shares of Exxon Mobil and Chevron decreased 2.9% and 2%, respectively.

Other energy shares such as Schlumberger Limited (SLB – Analyst Report), ConocoPhillips (COP – Analyst Report), EOG Resources, Inc. (EOG – Analyst Report), ONEOK Inc. (OKE) and Chesapeake Energy Corporation (CHK – Analyst Report) dropped 2.7%, 2.2%, 2.7%, 7.8% and 6.6%, respectively. Overall, the Energy Select Sector SPDR (XLE) plummeted 3.1%. The sector was the biggest loser among the S&P 500 sectors.

Meanwhile, the materials sector spent the entire day in negative territory. The Materials Select Sector SPDR (XLB) fell 2.1% due to growth concerns among steelmakers. The Market Vectors Steel ETF went down by 3.4%. The Industrial sector closely followed the materials sector. The Industrial Select Sector SPDR (XLI) slipped 1.9% after shares of The Boeing Company (BA – Analyst Report) declined 3.9%. Boeing fell below its 50, 100 and 200-day averages.

Boeing shares fell despite the International Air Transport Association forecast that the collective global net profit after tax of the airline industry will increase to $25 billion next year, more than $19 billion estimated for the current year. Shares of other airline companies including JetBlue Airways Corporation (JBLU), Southwest Airlines Co. (LUV) and United Continental Holdings, Inc. (UAL) gained 0.7%, 1.8% and 1.9%, respectively.

Separately, the SPDR S&P Homebuilders ETF (XHB) dropped 2.5%, the second highest among the S&P 500 sectors. Housing stocks such as Lennar Corp. (LEN – Analyst Report), DR Horton Inc. (DHI – Analyst Report), Toll Brothers Inc. (TOL – Analyst Report), Beazer Homes USA Inc. (BZH) and PulteGroup, Inc. (PHM) decreased 5.3%, 3.5%, 7.9%, 5.4% and 3.5%, respectively.

Meanwhile, shares of Yum! Brands, Inc. (YUM – Analyst Report) plunged 6.2% after the company slashed its earnings per share estimate for 2014 for the second time this year on slower-than-expected sales recovery in China. The company expects this year’s earnings per share to grow in mid-single-digit range, in comparison to prior expectations of 6–10% growth.

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Stock Market News for December 11, 2014 – Zacks Investment …