Slumping oil prices rein in stock indexes

USA stocks opened higher on Monday, with the Dow Jones Industrial Average hitting a record high, as investors snapped up beaten down technology stocks.

The Dow Jones industrial average increased 114 points, or 0.5 percent, to 21,499.

Brent crude dropped by more than a dollar on Tuesday to $45.62 a barrel, the lowest point since November previous year, while United States crude also fell by more than a dollar to $42.93.

Both oil benchmarks - USA crude and Brent - are down more than 15 percent since late May, raising concerns that prices could fall further in the near-term. "Investors were temporarily chased from the space but many companies in the sector offer growth which is hard to find in the market as a whole."Apple (AAPL.O) rose 3.8 percent to $146.07, providing the biggest boost to technology followed by Microsoft (MSFT.O), Alphabet (GOOGL.O) and Facebook (FB.O)". The Nasdaq composite climbed 60 points, or 1 percent, to 6,211.

Oil majors Chevron and Exxon were down about 1 per cent, with the S&P energy sector's 1.3 per cent fall leading the decliners. After being up more than 20 percent for the year, tech stocks in the S&P 500 fell sharply two Fridays ago on worries that they had risen too much, too quickly.

The S&P technology sector fell 0.5%, with big names such as Apple and Microsoft dragging on the S&P and Nasdaq.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.19 percent. The Nasdaq composite also outperformed, rising to a 1.65 percent.

Energy companies were also down as the price of crude oil fell about 3%.

Stocks in Taiwan, Singapore and Southeast Asian markets were lower. Some of its key holdings including Bank of America Corp (BAC - Free Report) and Goldman Sachs Group gained 2.1% and 2% respectively.

Stock movers: Shares of Red Hat Inc.(RHT) jumped 11% in thin premarket trading after the open-source software company late Tuesday posted earnings ahead of forecasts (http://www.marketwatch.com/story/red-hat-jumps-to-highest-price-levels-since-dot-com-boom-2017-06-20). Japan's Nikkei 225 Index fell by 0.5%, while Hong Kong's Hang Seng Index slid by 0.6%.

Among stocks, Lennar rose 3.2 per cent to US$54.40 after the No. 2 USA homebuilder reported a higher-than-expected quarterly profit. The two-year yield dropped to 1.34 percent from 1.36 percent, and the 30-year yield fell to 2.73 percent from 2.79 percent. Brent crude, the global standard, fell 11 cents to $45.91 per barrel.

Britain's FTSE 100 fell 0.3 percent to 7,448.72 and France's CAC 40 sank 1 percent to 5,239.08.

CURRENCIES: The British pound rose to $1.2676 from $1.2629 late Wednesday.

Tuesday's slump for oil led shares of Transocean to drop 36 cents, or 4.2 percent, to $8.20 and Marathon Oil to lose 43 cents, or 3.4 percent, to $12.06.

  • Zachary Reyes