The Drop in Oil Price is Dragging the Markets Down, and Other Updates

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U.S stocks have fallen today for a fourth day running due to the decline in energy prices. European economic concerns is also manifesting fear for US investors.

The Dow Jones Industrial fell by 84 points, equivalent to half a percent, and was trading at 16,721 around mid-day today. The S&P500 index has dropped by 14 points equivalent to 0.7 percent and is trading at 1,932. The NASDAQ composite has dropped by 37 points equivalent to 0.8 percent and is trading at 4,385.

The problems are arising from the declining oil prices which even dropped below $90 a barrel at one point. This is due to the announcement by OPEC that oil production would be maintained at the current levels in spite of the fact that the global economy is weakening while potential for extraction of oil supplies remains high. The U.S crude oil benchmark has dropped 55 cents to $90.19 a barrel in N.Y. Brent crude, which is the international benchmark, dropped off by $1.59 to $92.57 per barrel.

This is good news for consumers.   For them it means lower prices at the fuel pumps. The problem is that it’s a dent in the profitability of U.S energy companies and others worldwide, as they make up a large part of the markets.

Energy companies such as Chesapeake Energy, Halliburton and Nabors Industries have dropped between 3 to 4 percent each.

This is the worst week in almost two months for both the S&P 500 and the Dow, both have dropped approximately 2.2 percent this week. The former index is on course for a fourth consecutive days drop since December last.

This is allied with the troubles of the European markets which sank today following the central bank chief, Mario Draghi, stating that the European Central Bank would maintain interest rates at their current record low rates and a program to buy bonds would be initiated in order to provide stimulus to economic demand. The statement about the program was low on detail however, and this had a big impact on consumer confidence right across the European continent.

The problems in Europe have been problematic to their U.S trading counterparts for a number of weeks now. Europe is a big importer of American goods as part of the global trade, if the slowdown continues it will mean a decline in US company’s profits.

It’s not all bad news for Wall Street though, as unemployment benefits are down by 8000 to 287, 000. The overall picture is that 2.3 million people are in receipt of the benefits which is the lowest since June ’06.

The monthly jobs report is being closely monitored by investors and are to be released tomorrow by the Labour Department. Forecasts are that US companies added 215,000 new workers last month and the unemployment rate will remain at 6.1 percent.

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