Oil prices drop, steep losses in financial and technology send stocks lower Monday

Oil prices, China slowdown put investors in selling mood

Oil prices slumped again on Monday along with financial, technology and other companies.  

Steep losses in financial, technology and other companies sent U.S. stocks sharply lower in afternoon trading Monday, pulling the Dow Jones industrial average down 400 points. The decline followed drops in Europe and set the market on course for its second big loss in a row. Crude oil prices slumped again.

Keeping score: The Dow Jones industrial average fell 396 points, or 2.5 per cent, to 15,808 as of 2:32 p.m. Eastern Time. Shortly before that, it was down as much as 401 points. The Standard & Poor’s 500 lost 46 points, or 2.5 per cent, to 1,833. The Nasdaq composite dropped 131 points, or 3 per cent, to 4,231.

The quote: “Traders are worried that the financial market weakness that we’re experiencing is going to lead to weakness in the real economy,” said Jim McDonald, chief investment strategist at Northern Trust.

Turbulent market: Several factors have investors in a selling mood this year, including falling crude oil prices and the economic slowdown in China and elsewhere. Traders will be monitoring several big company earnings this week to see what management teams say about their prospects for future earnings.

Sector view: All 10 sectors in the S&P 500 index lost ground. Materials companies fell the most, 3.9 per cent. Banks and other financial companies, consumer discretionary and technology stocks also fell sharply.

Big drop: Natural gas companies Chesapeake Energy and Williams Cos. topped the list of decliners in the S&P 500. Chesapeake slumped $1.01, or 33 per cent, to $2.05. Trading in Chesapeake was halted earlier amid speculation the company was preparing to file for bankruptcy protection. Chesapeake issued a statement around midday saying it currently has no plans to pursue bankruptcy. Williams slid $6.27, or 36.6 per cent, to $10.85.

Fickle about financials: Credit Suisse Group AG and Goldman Sachs Group were down sharply in afternoon trading. Goldman lost 6.9 per cent, the biggest drop in the Dow. The stock shed $10.76 to $145.71. Credit Suisse slid 5 per cent on news that the bank’s new CEO has asked for his bonus to be cut following a report of a huge fourth-quarter loss and plans for 4,000 job cuts. The stock fell 75 cents to $14.20.

Rough quarter: Cognizant Technology Solutions sank 7.8 per cent after forecasting earnings and revenue that were well below what analysts were expecting. The stock shed $4.56 to $53.98.

In trouble: Harman International Industries was down 5.8 per cent on news that a former executive at the car audio and video systems’ maker has been charged with insider trading by federal prosecutors. The stock lost $4.08 to $66.61.

Going private: Apollo Education Group vaulted 20.1 per cent after agreeing to be acquired by a consortium led by investment firm The Vistria Group. The firm aims to take the for-profit college operator private. The stock gained $1.40 to $8.35.

Deal action: GoPro climbed 10.8 per cent after the high-definition camera company signed a patent licensing deal with Microsoft Corp. for file storage technology. GoPro added $1.08 to $11.04.

Markets overseas: Among Europe’s main indexes, Germany’s DAX fell 3.3 per cent, while France’s CAC 40 dropped 3.2 per cent. The FTSE 100 index of leading British shares slid 2.7 per cent. In Asia, many markets were closed for the Lunar New Year holidays. Japan’s benchmark Nikkei 225 rose 1.1 per cent, while Australia’s S&P/ASX 200 was flat.

Energy: Benchmark U.S. crude oil fell $1.20, or 3.9 per cent, to close at $29.69 a barrel in New York. Brent crude, a benchmark for international oils, dropped $1.24, or 3.6 per cent, to $32.79 a barrel in London.

Bonds and currencies: Bond prices rose. The yield on the 10-year Treasury note fell to 1.74 per cent from 1.84 per cent late Friday. The euro was up at $1.1188 while the dollar fell to 115.39 yen.