U.S. stocks closed sharply lower in a truncated trading session on occasion of Black Friday, primarily due to precipitous decline of crude oil prices. Moreover, ongoing trade war between the United States and Chins further intensified following news that the Trump administration has urged its close defense allies to stay away from telecom equipment made by Huawei Technologies of China. All three major stock indexes finished in the red for the day as well as for the week.
The Dow Jones Industrial Average (DJI) closed at 24,285.95, down 0.7% or 178.74 points. The S&P 500 Index (INX) decreased 0.7% to close at 2,632.56. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,938.98, shedding 0.5%. A total of 3.4 billion shares were traded on Friday, lower than the last 20-session average of 8.2 billion shares. Decliners outnumbered advancers on the NYSE by 1.36-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.17-to-1 ratio. The CBOE VIX increased 3.5% to close at 21.52.
How Did the Benchmarks Perform?
The Dow ended in the negative territory. Notably, twenty-two components of the 30-stockblue-chip index closed in the red while remaining eight in the green. The tech-laden Nasdaq Composite finished in the red buoyed by weak performance of tech giants, particularly the FAANG stocks.
Meanwhile, the S&P 500 also closed in red and entered into the correction territory as it has fallen 10.2% from its recent high recorded on Sep 20. Notably, the benchmark index has entered into correction territory for the second time in 2018. Energy Select Sector SPDR (XLE), Communications Services Select Sector SPDR (XLC) and Materials Select Sector SPDR (XLB) are major losers with 3.1%, 1.3% and 1.1%, respectively. Notably, eight out of total 11 sectors of the benchmark index closed in the red while three finished in the green.
Crude Oil Prices Continue to Plunge
On Nov 24, the U.S. benchmark West Texas Intermediate (WTI) crude oil future price for January slid $4.21 or 7.7% to settle at $50.42 a barrel. This was the worst single day decline of WTI crude prices since Jul 6, 2015 and the lowest settlement since Oct 9, 2017. This marked the decline of WTI crude prices for seven successive weeks. For the week ended Nov 26, the WTI crude price tumbled 10.6%.
On Nov 24, international benchmark of Brent crude oil also declined $3.80 or 6.1% to $58.80 a barrel. For the week ended Nov 26, the WTI crude price tumbled 10.6%. Currently, both the WTI and Brent are reeling under bear market. A surge in global oil supply and significantly weak global demand for oil are the primary reasons behind oil price plunge.
Consequently, shares of major crude oil explorers like Chevron Corp. (CVX - Free Report) and Exxon Mobil Corp. (XOM - Free Report) declined 3.4% and 2.7%, respectively. Both stocks carry a Zacks Rnak #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Trade War Concerns Intensify
On Nov 23, The Wall Street Journal reported that the Trump Administration has urged its allies to stop using Huawei telecommunications equipment due to the concern of serious security espionage by the Chinese company.
Notably,President Donald Trump and his Chinese counterpart Xi Jinping are expected to meet at the G-20 summit later this month to resolve the eight-month old trade dispute between two of the world’s largest trading nations. Notably, the U.S. government has warned that it will levy tariffs worth $267 billion on China in the first week of December if the upcoming summit between the two presidents fails to resolve the issue.
As a result, shares of trade-sensitive trade stocks like Facebook Inc. (FB - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Amazon.com Inc. (AMZN - Free Report) tumbled 2.3%, 1.3% and 1%, respectively.
Wall Street posted stiff weekly loses for the second successive weeks. All the major stock indexes remained in the red. During the week, crude oil price for both WTI and Brent crude crushed to their lowest levels in 2018. Moreover, technology stocks continued their downward journey led by FAANG stocks. Additionally, lingering trade conflicts between the United States and China significantly dented investors’ confidence.
For the week as a whole, the Dow, S&P 500 and Nasdaq Composite was down 4.4%, 3.8% and 4.3%, respectively. The last week marked the worst Thanksgiving Day week for these three indexes since 2011. Notably, both Nasdaq Composite and S&P 500 are in correction territories.
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