Wall Street fails to stage a recovery as crude oil sell-off weighs on sentiment
|- All major sectors close the day in the negative territory.
- CBOE Volatility Index rises more than 10%.
- WTI falls more than 7%, continues to drag energy lower.
Although major equity indexes in the U.S. tried to make a recovery after starting the day sharply lower on Tuesday, the renewed selling pressure on crude oil caused the bearish pressure to strengthen and forced Wall Street to extend its slide. The negative market sentiment today was also shown by a more than 10% increase in the CBOE Volatility Index.
With the barrel of West Texas Intermediate losing more than 7% on the day and falling to its lowest level in 13 months, the S&P 500 Energy Index finished the day 3.3% lower. Additionally, home improvement chain Lowe's announced its plan to shut down their stores in Mexico in a restructuring effort and dragged the S&P 500 Consumer Discretionary Index lower, which lost 2.18% on the day.
Commenting on the market perception, "Despite what has been a pretty good earnings season, people are looking ahead to next year and are worried about a slowdown. It's sell first, ask questions later at this point," Mark Kepner, equity trader at Themis Trading in Chatham, New Jersey, told Reuters.
The Dow Jones Industrial Average dropped 551.8 points, or 2.21%, to 24,465.64, the S&P 500 fell 48.84 points, or 1.82%, to 2,641.89 and the Nasdaq Composite lost 119.65 points, or 1.7%, to 6,908.82.
DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik
Dow's collapse these days has put it at a brink of a bearish market, and technical readings in the daily chart support further declines ahead, as the index has extended its slump below all of its moving averages, with the 20 DMA gaining downward traction between the larger ones, and technical indicators heading sharply south at fresh November lows.
In the 4 hours chart, the case for a bearish extension is even stronger, as technical indicators barely lost downward strength, despite being in oversold levels, as the 20 SMA turns south roughly 650 pips above the current level. The index bottomed at 24,365 October 30, while Tuesday's low was settled at 24,367, making of the area a strong static support that if broken, could lead to a test of 24,121 October monthly low.
Support levels: 24,414 - 24,365 - 24,300.
Resistance levels: 24,477 - 24,521 - 24,566.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.