Stocks Slip on Saudi Arabia Attack 09/16 09:33
Stock markets around the world took an apprehensive step backward Monday
after an attack on Saudi Arabia's biggest oil processing facility sent the
price of oil surging.
NEW YORK (AP) -- Stock markets around the world took an apprehensive step
backward Monday after an attack on Saudi Arabia's biggest oil processing
facility sent the price of oil surging.
The attack, which Yemeni rebels said they were behind, raised worries about
the risk of more disruptions for oil. President Donald Trump warned that the
United States was "locked and loaded" to respond as his administration pinned
the blame for the attacks on Iran.
Crude prices soared 10%, while prices for Treasurys, gold and other
investments seen as less risky rose.
The S&P 500 was down modestly, and stocks across the New York Stock Exchange
were nearly evenly split between winners and losers. Energy stocks climbed with
the price of oil, while airlines and other companies that have big oil and fuel
bills were sharply lower.
The stock market has been volatile since the summer, as worries waxed and
waned about the U.S.-China trade war. The move for stocks has been higher the
past few weeks, boosted by renewed optimism about easing tensions between
Washington and Beijing, and the S&P 500 had climbed back within 1% of its
KEEPING SCORE: The S&P 500 dipped 0.2%, as of 10 a.m. Eastern time, after
paring a loss that hit 0.5% shortly after trading opened.
The Dow Jones Industrial Average fell 73 points, or 0.3%, to 27,146, and the
Nasdaq composite slipped 0.3%. Small stocks in the Russell 2000 index were
better performers, and it climbed 0.3%.
ENERGY SPIKE: The attack in Saudi Arabia caused a big disruption to oil
supplies, but only a temporary one. Other countries can release some of the oil
supplies they've built up in reserves to make up for the loss, analysts said.
The bigger threat is the worry about more attacks in the future.
"At a time when oil markets have been in the shadows of a weak global
macroeconomic backdrop, the attack on critical Saudi oil infrastructure calls
into question the reliability of supplies from not just one of the largest net
exporters of crude oil and petroleum products but also the country that holds
most of the world's spare production capacity," Barclays analyst Amarpreet
Singh wrote in a report.
Benchmark U.S. crude jumped more than $5 to $60.11 per barrel. Brent crude,
the international standard, rocketed up $6.22 to $66.44 per barrel.
That helped energy stocks in the S&P 500 surge 3.1%, the only sector among
the 11 that make up the index to rise. Marathon Oil gained 9.2%, Devon Energy
rose 8.1% and oilfield services provider Halliburton climbed 8%.
PAIN AT THE PUMP: Airlines have huge fuel bills, and any rise in the price
of oil can hurt them. American Airlines Group, which spent $3.7 billion on fuel
and taxes in the first half of the year, fell 5.6% for one of the biggest
losses in the S&P 500.
United Airlines lost 2.9%, and Delta Air Lines lost 2.8%.
Cruise ships also burn lots of fuel, and Carnival lost 2.6%.
STRIKE ONE: General Motors sank 2.1% after more than 49,000 members of the
United Auto Workers went on strike. The union and company have been locked in
contract talks, and it wasn't clear how long the walkout would last.
WEEK AHEAD: The week's headline event is the Federal Reserve's meeting on
interest rates. Investors are confident the central bank will cut short-term
rates by a quarter of a percentage point to a range of 1.75% to 2%. It would be
the second such cut in two months, as the Fed tries to protect the economy from
a global slowdown and the effects of the U.S.-China trade war.
MARKETS ABROAD: European markets mostly fell, and France's CAC 40 was down
0.6%. Germany's DAX lost 0.5%, and the FTSE 100 in London slipped 0.3%.
Trading in Asia was mixed. The Hang Seng in Hong Kong fell 0.8%, the Kospi
in South Korea rose 0.6% and Chinese stocks in Shanghai were virtually flat.