The stock markets in the United States declined as equities of energy companies fall due to slumping oil prices.
The oil price dropped around 20% to 25% from its highest level at $105 per barrel in June. The current price of crude oil (WTI) is $80.59/bbl. The oil prices are declining because of the changes in the demand and supply worldwide.
The United States has become a major energy producer because of the booming shale industry. Over the past five years, the U.S. increased its domestic oil and gas supply by 50%. The country is now the largest producer of natural gas.
The declining oil prices are pressuring the drillers in the United States. Data from Baker Hughes showed that the number of active rigs drilling for oil and gas fell over the past two months. As of October 17, 19 oil rigs stopped operating.
James Williams, president of WTRG Economics said, “Unless there’s a significant reversal in oil prices, we’re going to see continued declines in the rig count, especially those drilling for oil.”
Yesterday, Daniel Loeb of Third Point LLC emphasized that the United States remained the best place to invest. According to him, the “markets will resume an overall upward trajectory in the U.S. through year-end.
On the other hand, Laurence Fink, CEO of BlackRock, Inc. (NYSE:BLK) stated the selloff in the U.S. stock markets last week “weeded out excesses.” According to him, “This is just a market correction, and we need market corrections to clean the market out.” He added that he would be buying equities as a long-term investor.
In a telephone interview with Bloomberg, Randy Bateman, chief investment officer at Huntington Asset Advisors commented, “It might be kind of a slow reflection day today. We’ll probably just have a little digestion from yesterday. Right now, we’re looking at earnings being the driving force of this market. There will be winners and losers.”
- Dow Jones Industrial Average (DJIA) – 16,461.32 (-0.92%)
- S&P 500- 1,927.11 (-0.73%)
- NASDAQ- 4,382.85 (-0.83%)
- Russell 2000- 1,097.13 (-1.41%)
- EURO STOXX 50 Price EUR- 3,008.53 (+0.57%)
- FTSE 100 Index- 6,399.73 (+0.43%)
- Deutsche Borse AG German Stock Index DAX- 8,940.14 (+0.60%)
- Nikkei 225- 15,195.77 (+2.64%)
- Hong Kong Hang Seng Index- 23,403.97 (+1.37%)
- Shanghai Shenzhen CSI 300 Index- 2,418.64 (-0.61%)
Stocks in Focus
The stock price of Yahoo! Inc. (NASDAQ:YHOO) rose 4.53% to $42 per share after reporting better than expected financial results for the third quarter. The company posted earnings or $0.52 per share on $1.09 billion in revenue compared with consensus estimate of $0.32 in earnings per share on $1.05 billion in revenue.
Broadcom Corporation (NASDAQ:BRCM) gained 5.46% to $39.37 per share after reporting earnings that beat the consensus estimate of Wall Street analysts for the third quarter. The company generated $0.91 in earnings per share compared with the $0.84 per share consensus estimate. Its revenue was $2.26 billion.
The shares of Six Flags Entertainment Corp (NYSE:SIX) surged 12.75% to $38.90 per share after reporting better than expected financial performance for the third quarter. The company said its adjusted EBITDA rose 8% to $291 million and its revenue climbed 7% to $542 million.