Major U.S. benchmarks moved significantly lower on Thursday as commodities tumble and the Federal Reserve’s interest rate hike come in focus. Investors yesterday reacted to the sharp decline in oil prices fueled by concerns over the global supply glut which failed to subside as predicted, as well as a series of comments made by Federal Reserve and European Central Bank officials regarding their respective economic policies. While Fed officials focused on the prospect of raising borrowing costs this year if market conditions meet their requirements, their European counterparts discussed further stimulus for the Eurozone. Adding more pressure, Department store retailer Nordstrom (N:JWN) posted a soft earning report, slashing the company’s shares by more than 15%. The Dow Jones Industrial Average fell 254.15 points, or 1.44%, to trade at 17,448.07, marking the index’s biggest point-based decline in nearly two months. The S&P 500 declined 29.03 points, or 1.4%, to trade at 2,045.97 as the index moved into negative territory for the year. The Nasdaq Composite shed nearly 62 points, or 1.22%, to trade at 5,005.08 and is the only major U.S. index to remain out of the red in 2015. Energy shares plummeted after oil prices continued their decline. A recent government report has shown an unexpected growth in oil stockpiles, reigniting concerns over high supplies with weak demand prospects. Federal Reserve officials, including Fed Chair Janet Yellen, discussed the continued debate over raising interest rates. Members provided different points of view on the matter, however previous comments on the subject have already gotten most of the market betting on a December hike, according to CME Group’s FedWatch. At the same time, European Central Bank president Mario Draghi continued the bank’s movement towards more easing. Draghi hinted at more stimulus programs aimed at spurring growth in the Eurozone and avoiding a state of deflation.
The commodity market moved lower on Thursday, nearing multi-year lows. Copper, often considered a reliable gauge economic health due to its extensive use in the industrial and manufacturing sectors, has fallen to a new six year low at $4,795.5 a ton, brining the weekly total to a 3.8% decline. Oil fell sharply, nearing a six-year low touched in August when the market was ruled by concerns over China’s growth. Crude oil traded around $41.5 a barrel and Brent crude sunk nearly 4% t0 around $44 a barrel. Overall, Brent crude has fallen more than 7% this week.
This week’s major economic data releases conclude with GDP and inflation data from the Eurozone as well as U.S. retail sales data.