US markets dropped even more early Wednesday after oil plunged to its 2003 low of $27 a barrel. Massive sell-offs continued through all the stocks led by the energy sector.
Dow Jones industrial average plunged nearly 400 points (2.6 percent) Wednesday morning, piling on even more woe to the worst beginning of a year in stock market history. Similarly, the S&P 500 lost 51 points (2.7 percent) and Nasdaq Composite lost 3 percent before a minor rebound.
The sell-offs were triggered by record-low oil prices dropping by a further 4 percent, sinking below $27 per barrel, its lowest price since September 2003. Crude oil has become so cheap after the lifting of UN sanctions against Iran, because investors expect Iran’s oil exports to add to the current supply glut.
The Dow is now down more than 10 percent since 2016 began. The S&P 500 has also lost more than 10 percent of its value over the same period, while Nasdaq Composite lost 13 percent.
Fear over the plummeting oil prices, which have dropped by 70 percent since 2014, has been compounded by worries over market turmoil in China, the world’s second-largest economy.
“This is a serious selloff that is in large part driven by the 70 percent decline in oil prices and concern over the slowing Chinese economy,” said Edward Harrison of RT’s Boom Bust. “The question now is whether a liquidity crisis develops unexpectedly as a result of this and whether there are serious real economy effects. We won’t know for some time. However, we should expect the US Federal Reserve to push back its rate hike stance at a minimum, effectively taking a hike in March off the table.”
World facing ‘wave of epic debt defaults,’ says economist who predicted Lehman crash https://t.co/7L3NxUf5Rl pic.twitter.com/PGr53f84CU
— RT (@RT_com) January 20, 2016
Yet the price at the pump remain the same.
Or rises.