U.S. stock markets ended lower on Monday while oil prices plunged after global oversupply created concerns over weak demand. Monday’s declines deepened the recent slump in oil prices, bringing a barrel of oil down to a four-month low amid soft demand, a marked increase in the number of active oil rigs and disappointing construction spending and manufacturing. The number of active U.S. oil rigs has increased in four of the past five weeks. Additionally, recently released economic data reports have created concerns that demand is also falling. The purchasing managers manufacturing index fell from 53.5 in June to 52.7 in July, demonstrating that U.S. factories had less activity. At the same time, another report revealed that construction spending missed expectations and rose just 0.1%. Benchmark U.S. crude fell $1.95, or 4.1%, to trade at $45.17. Crude oil suffered considerable declines last year but so far, 2015 has seen prices decline by 15%. Brent oil, used by many refineries, has also declined, falling $2.69, or 5.2%, to trade at $49.52 per barrel and is down 13.5% this year.
Oil’s retreat is pegged as the cause for the fall in U.S. shares on Monday. The selloff increased over the day as more data signaled falling demand alongside the increased oil production. Prices have fallen more than 50% over the last 12 months and stock indexes usually follow oil’s decline. The Dow Jones fell 91.66 points, or 0.5%, to trade at 17598.2 after paring earlier losses. The S&P 500 index fell 5.8 points, or 0.3%, to trade at 2098.4 and the Nasdaq composite fell 12.9 points, or 0.3%, to trade at 5115.38. As can be expected, the energy sector was the biggest decliner, falling more than 2%. Chevron Corp. (NYSE:CVX) has fallen 3.3% and Exxon Mobil (NYSE:XOM) has fallen 1.5%.
In the meantime, European traders were cautious as Greece reopened its stock market. Positive earnings reports and economic data showing and uptick in EU factory activity helped the STOXX 600 gain 0.8%. The German DAX added 1.19% to trade at 11443.72. The French CAC 40 added .75% to trade at 5120.52 and the FTSE/ATHEX Large Cap index expectedly tumbled 16% on its first day of activity in over five weeks.
The U.S. nonfarm payrolls, scheduled for release this Friday, will be the focus this week. The Federal Reserve stressed its data-dependent position on raising interest rates on numerous occasions, making this week’s report particularly influential.