NEW YORK (AP) — Another plunge in the price of crude oil sent the stock market sharply lower.
Oil and gas companies led the way down Wednesday as sliding oil prices threatened even more damage to the battered energy sector.
Chevron fell 7 percent, the most in the Dow Jones industrial average.
The price of U.S. crude oil sank 7 percent and is trading at its lowest level since May 2003.
The Dow dropped 520 points, or 3.2 percent, to 15,549 as of 12:30 p.m. Eastern time.
The Standard & Poor’s 500 index lost 63 points, or 3.4 percent, to 1,817. The Nasdaq lost 150 points, or 3.4 percent, to 4,325.
U.S. indexes are down 10 percent or more since the beginning of the year.
Bond prices rose as investors shifted money out of stocks.
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Interesting how what affects the investment class is in headlines, and has everyone’s attention as oil prices affect stocks, RIAs, state budgets in oil producing states, but when the crisis affects the non-investment class—hunger, toxic water supplies, housing shortages, etc., you’d have to hunt for those stories. they’d be features, maybe in the Sunday editions, at most. And, it’s the same thing, really—what affects any sector, affects us all, but if you are able to hide something from your view, well, then.
The Wall Street Casino Whales are taking a bath because of this. As intended.
The big banks are especially hung out to dry with their commodities desks getting hammered and so are the big Sovereign Funds, all of which are heavily leveraged in Oil futures.
You live by the Sword, you die by the Sword.
It’s not just the whales taking a bath on this. As Krugman pointed out in his blog only (I think) last week, while oil prices dropping is initially stimulative, beyond a certain point, it gets contractionary as hell, because of the way it more or less shuts down investment/demand on the part of both highly-leveraged smaller exploratory companies and oil-dependent governments like Saudi Arabia. That, in turn, kicks other stocks in the balls, and as this story indicates, leaves the entire stock market slumping.
And while yes, the individual brokers may be tearing their hair out, the way the system’s set up so that stocks losing money doesn’t necessarily cost the big banks money - people pulling their investments does. As was so eloquently explained in the seminal economic thesis penned by Harris-Weingrod, Trading Places, “Y’all are bookies.” And absent extremely unsual circumstances, the bookies never lose money.
Shedding a tear for the oil companies is right up there with ‘thinking Donald Trump is a decent human being’ on my list of ‘Things I will never do’, but the whales are whales for a reason. They’re not gonna take a real hit on this. The real hit comes in the form of seniors who played by the rules their whole lives, invested carefully, and are using those investments to suppliment where Social Security just wouldn’t be enough. I’m watching my 72 year old mother really verging on panic over this stuff - especially since my dad died last year, so there’s no second pension/SS to sock away for emergencies. And given that her father lived to 94… she’s got a not-unreasonable expectation of needing to survive on that money for a while.
Considering that the price of oil has been steadily dropping it is a good thing that Oil companies were not permitted to “drill baby drill” as they intended. So, where are the Oil industry puppets of the GOP that proposed an even greater glut of oil activity? Oops.
Airlines are still charging exorbitant prices even though their cost for fuel acquisition must have come down tremendously.
And the government still gives subsidies to Big Oil even they are filthy rich on their own.
Wait, I know… let’s get rid of food stamps and Planned Parenthood. Let’s deport more immigrants, raise prices on medications, have everybody buy a few guns… and stop those economy-killing same sex marriages. That’ll fix things.
Ouch. Sadly, there’s not a thing anyone can do about it but watch. Personally, if this is about oil and the banking sector, I could give a shit. CEOs for those companies will still make bank, so really who cares? Maybe we can transition to renewables even more so now that the bottom is falling out of the fossil fuel industry. Unfortunately, my retirement account will barely get me over the old age threshold as it stands. All the explanations in the world for what is happening in the markets are suspect as far as I’m concerned, especially when it comes to Wall Street and their profiteers. Its hasn’t benefitted the average Joe who invests in the market for a long time now anyway. It all about corporate profit that always goes to the top executives…so why should I start giving a shit now?