Wall St drops as oil price continues to descend

US stocks fell today, putting the benchmark S&P 500 on track for its first weekly decline in eight, following a further drop in oil prices and disappointing data out of China, the world’s second-biggest economy.

The S&P index had broken a three-day skid on Thursday, buoyed by upbeat retail sales figures and other data that pointed to a strengthening US economy, but finished well off its session highs as oil prices slipped.

Weak oil prices have added to worries about global demand and raised concerns about earnings for some energy companies, with year-end tax selling putting more pressure on the group. In addition, continued weakness in oil prices has prevented investors from bargain hunting the sector.

“It’s a time when most managers have underperformed their benchmarks so rather than stepping up to the plate on these stocks, they are avoiding them because they are trying to play catch up,” said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

“’Don’t try to catch a falling knife’ - that’s what you have here.”

The S&P energy sector was down 1.4 per cent for the session and is down about 16 percent this year as the worst performing of the 10 major S&P sectors.

Disappointing data that indicated China’s economy showed further signs of softening in November weighed on the materials sector, which dropped 1.9 percent.

Investors shrugged off economic data that showed US producer prices fell 0.2 per cent in November and were muted even outside of energy, which may influence the US Federal Reserve’s plans to keep interest rates near zero for a “considerable time.”

In addition, the Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment rose in December to a near eight-year high.

Brent crude slipped to a low of $61.91, its lowest since July 2009.

- Reuters