Energy shares fall most since September, dragging S&P 500 lower

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Investors were burned by a sell-off in oil prices that pushed energy shares into their biggest one-day decline in nearly six months, in turn dragging the S&P 500 lower for a third straight day.

The S&P 500 finished the day 0.2 per cent lower at 2,362.98 — with energy falling 2.5 per cent in its steepest one-day drop since September 13 to lead the decline on the benchmark index. Wednesday’s drop took the sector’s year-to-date decrease to 8.5 per cent, compared with a 5.6 per cent advance for the broader benchmark index.

The oil drop also dragged the Dow Jones Industrial Average 0.3 per cent lower to 20,855.73 on the day, while the Nasdaq Composite was little changed at 5,837.55

The sell-off in energy shares came as a report from the Energy Information Administration published earlier in the day showed US crude stocks climbing for the ninth straight week. The report showed that crude stocks climbed more than expected, 8.2m barrels, as refinery runs slid to 15.5m barrels per day, and imports rose by 561,000 to 8.2m bpd.

That in turn saw West Texas Intermediate, the US crude marker, fall as much as 5.8 per cent to $50.05 a barrel, before paring some of its losses.

The rise in crude stocks comes as US drillers have brought rigs back online in eight of the past nine weeks. Saudia Arabia’s oil minister Khalid al-Falih noted yesterday that a supply cut deal agreed to by Opec members and non-members like Russia –which would curb output by 1.6m bpd in the first six months of the year and bolster oil prices — was helping revive US output.

Elsewhere, US Treasuries continued their retreat, with the 10-year US Treasury yield, which moves inversely to price, rising 3.6 basis points to 2.554 per cent. Meanwhile, spot gold slid 0.6 per cent to $1,209 a troy ounce, taking its losses for the week thus far to 2.1 per cent.

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