Investing.com -- U.S. stocks fell precipitously on Thursday, as massive sell-offs in the energy and commodity sectors and the prospect of a December interest rate-hike from the Federal Reserve weighed heavily on all three major indices.
A stronger than expected inventory build last week and bearish supply forecasts from OPEC on Thursday pushed oil prices to fresh two-and-a-half month lows, as U.S. crude futures fell below $42 a barrel for the first time since late-August. Following the decline, the front month for WTI crude future contracts slumped to near six-and-a-half year lows from earlier this summer. At the same time, gold, copper and palladium all tumbled to multi-year lows, amid continuing indications from the Fed that it could raise short-term interest rates when it meets next on December 15-16.
The Dow Jones Industrial Average and the NASDAQ Composite index fell sharply extending losses from earlier this week, while the S&P 500 Composite index closed lower for the sixth time in seven sessions. On Thursday, the Dow lost 254.28 or 1.44% to 17,447.94, while the NASDAQ dropped 61.94 or 1.22% to close at 2,045.97. The S&P 500, meanwhile, fell 29.03 or 1.40% to 2,045.97 as all 10 sectors closed in the red. Stocks in the Energy and Basic Materials sectors lagged, each plunging by more than 2% on the session. Stocks in the Industrials, Health Care and Financials industries each fell by at least 1.5%.
While a handful of Fed policymakers, including chair Janet Yellen made public comments on Thursday, none appeared strongly opposed to normalizing monetary policy at next month's highly anticipated meeting. On Thursday evening, Fed chair Stanley Fischer is scheduled to deliver a speech on the transmission of exchange rates to output and inflation at the Fed's post Financial Crisis conference in Washington. Nearly a decade has passed since the Fed last raised its benchmark Federal Funds Rate.
A rate hike is largely viewed as bearish for equity markets as investors exit their positions to take advantage of higher yields in bonds.
The top performer on the Dow was United Technologies Corporation (N:UTX), which gained 0.99 or 1.01% to close at 99.25. Only two Dow components, United Technologies (N:UTX) and CSCO, closed in the green on Thursday. The worst performer was Caterpillar Inc (N:CAT), which fell 3.40 or 4.73% to 68.51. Low commodity prices adversely affect the world's leading manufacturer of construction and mining equipment, as mining companies slash capital expenditures in an effort to maintain earnings.
The biggest gainer on the NASDAQ was Liberty Ventures (O:LVNTA), which added 1.72 or 4.09% to 43.82. On Wednesday, the Colorado-based media company announced that it is acquiring a 3.4% stake in Lions Gate Entertainment in an effort to further its global relationships. The worst performer was Seagate Technology (O:STX), which lost 3.16 or 3.99 % to 75.94.
The top performer on the S&P 500 was Kohl`s Corporation (N:KSS), which surged 2.71 or 6.28% to 45.87, after beating third quarter revenue and earnings, amid strong back-to-school sales. It came one day after shares in Macy's plunged nearly 15% after its decision to abandon a strategy to spin-off its real estate assets. The worst performer was Mallinckrodt (N:MNK), which tumbled 4.02 or 7.04% to 53.10. The Dublin-based pharmaceutical company has come under heavy speculative attacks from short seller Citron Research in recent days for its reimbursement of high-priced, specialty drugs from insurance companies.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a 2,528 to 585 margin.