It’s quite the sobering Monday on Wall Street as many traders and investors return from their holiday hiatus.
The Dow plunged over 250 points in mid-day trading as stock markets around the world fell sharply.
What’s going on? The main culprits of market jitters these days are falling oil prices and the souring global economy. Crude oil now trades at about $50 and even dipped briefly below that level on Monday — another psychological threshold for the market.
Experts now predict oil could go as low as $40 or even $30 a barrel. While that’s great for U.S. consumers, who are enjoying gas prices of $2 or less not seen since the worst of the Great Recession, there comes a point when sustained low prices begins to really hurt energy company stocks and jobs in the U.S. and other countries around the world.
Today’s biggest stock losers are all energy drillers — Denbury Resources, Noble Energy and Anadarko Petroleum.
But the bigger picture is that stocks are overdue for a correction — when the market falls 10% or more. There was a close call in early October when U.S. markets dipped, but they never quite got to an official correction.
Goldman Sachs put out a warning note Monday, cautioning that professional investors may be “unduly bullish.”
The bank’s Sentiment Indicator is at 100 — the highest possible level. Historically, that hasn’t been good. When the indicator gets that high, it’s usually followed by a decline in stocks in the following six weeks.
CNNMoney’s Fear & Greed Index went from “Neutral” a week ago to “Fear” today, another barometer showing that the sentiment on Wall Street is shifting back into anxious mode.
While stock pickers are still forecasting gains for 2015, most say the uptick will be more modest this year than the past few years of double-digit gains. They also expect volatility to pick up.
