US stocks plunge on commodity price drops
NEW YORK—US equity markets plunged Thursday after oil and gold prices dropped, pulling energy and commodity stocks sharply lower.
A combination of the dollar’s surge after the European Central Bank ratcheted down its rhetoric on inflation, and economic data underscoring the sluggishness of the US recovery, knocked the wind out of more commonly speculated commodities just days after all-time records and multi-year peaks were hit.
The Dow Jones Industrial Average lost 139.41 points (1.10 percent) to finish at 12,584.17.
The broader S&P 500 lost 12.22 (0.91 percent) at 1,335.10, while the tech-heavy Nasdaq Composite fell 13.51 points (0.48 percent) to 2,814.72.
“Traders were spooked by a broad sell-off in commodities and more disappointing news from the jobs front,” said analysts at Charles Schwab.
“The US dollar moved sharply higher and crude oil prices plunged below $100 per barrel, as the European Central Bank left its benchmark interest rate unchanged, while taking a less-hawkish tone that lowered expectations of further rate hikes in the near future.”
In a day when shares fell across the board, big oil companies led the drop: ExxonMobil lost 2.58 percent; Chevron fell 1.97 percent: and US-traded shares of Petrobras were down 3.44 percent.
Miner Freeport McMoran meanwhile gave up 2.52 percent.
GM lost 3.09 percent despite turning in first-quarter earning that topped analysts’ estimates by two percent.
The huge US automaker more than tripled net income, but the lion’s share of that came from one-off sales of shares in Delphi Automotive and Ally Financial.
Meanwhile disappointing data on jobs cast a shadow over the market, one day before the government releases its much-awaited monthly unemployment report.
Early Thursday the Labor Department reported that initial jobless claims rose to 474,000 in the week ending April 30, a 10 percent increase from the prior week and an eight-month high.
Most analysts expected claims would fall, and the data raised fears that Friday’s employment report would be dismal.
The bond market rose sharply, meanwhile, suggesting that gold and oil sellers fled to US Treasuries. The yield on the 10-year Treasury note fell to 3.17 percent from 3.22 percent late Wednesday, while that on the 30-year bond slipped to 4.28 percent from 4.33 percent.
Bond yields and prices move in opposite directions.
