Oil Slide Adds to Investors' Downbeat Mood
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How did stocks perform during the holiday-shortened week and what were the major index moves?
With your money briefing, I'm Charlie Turner in New York for The Wall Street Journal. U.S. financial markets fell in Friday's half session, weighed down by the continuing fall in oil prices. It capped a bad holiday-shortened week for stocks. On Friday, the Dow Jones Industrials fell 178 points to 24,285. The NASDAQ lost 33 points. The S&P 500 gave up 17. The Dow's loss for the week was around 4%. The NASDAQ dropped 4.4%, and the S&P 500 fell 3.6%. Akani Ohtani is markets reporter for The Wall Street Journal, and she joins us in our studio. Akani, we've had the tech route, worries about a trade war, concerns about slowing global economic growth, and we've now come up with a new culprit for the market struggles.
Blame it on oil.
That's right. And I think in a way, it's almost a relief to investors who've been sort of questioning for weeks now why the stock market has been struggling so much to regain its footing. Well, at least the slide in oil prices is sort of an obvious thing that's going on in the markets and certainly weighing down sentiment. But it does add to this pressure point that people have been dealing with throughout a lot of the second half of the year, which is this question of how much global growth is slowing down. Because, of course, the slide in oil prices, people have been saying, isn't just about a supply problem. It's also sort of a demand side problem. And the more we see oil prices tumble in this really rapid and volatile fashion, I think the more nervous generally investors get.
Right. West Texas crude is now not much above $50 a barrel at the lowest level in more than a year. Were the declines in stocks exacerbated by the low holiday volume?
that's probably fair to say, although we did end up, I think, closing around the levels or maybe slightly above where futures had been pointing to before the opening bell. But yeah, we only saw 3.4 billion shares change hands today, which marks the lowest volume trading day of the year, including other abbreviated sessions that we've seen so far.
Is the Federal Reserve on people's minds at this point? We have the Fed minutes coming up in the new week, and there's been a lot of disagreement over how aggressive policymakers should be in raising interest rates.
I definitely think that that's another thing that people are worried about, especially because in recent weeks we've heard more discussion about whether the Fed is likely to slow down its pace of interest rate increases or not because of the volatility that we've been seeing in the markets and some of the weaker data points that we've been seeing across the economy recently. And I think so far a lot of folks in the markets believe that the answer is no, that the Fed is still likely to raise rates as signaled back in its September meeting. And that has, I think, introduced a little bit of nervousness again because there's a sense that the Fed, which under previous Fed chairs was seen as being more accommodative to the markets when they started tumbling, more opens the idea of slowing down.
a little bit. I think a lot of folks think Jerome Powell is the opposite of that. And so that sort of removes a support point that folks might have been counting on earlier in the year.
And China is in the news again. It's never really been out of the news, I suppose. Its main stock market fell Friday. The Wall Street Journal reported the U.S. government had attempted to persuade foreign allies to avoid telecom equipment from China's Huawei due to what they see as cybersecurity risks. And also, the two countries are participating in a G20 summit at the end of the month in Argentina. So China is definitely a factor.
Yeah, and I think as usual, a lot of things could potentially go wrong. That's what people are always worried about because I don't think many are expecting a quick resolution to this trade fight that we've been seeing because it's already been going on for several months at this point. We've already seen tariffs put in place.
Why are tumbling oil prices being blamed for added investor pessimism?
We've already seen more sort of restrictive policies in general exchanged between the two countries.
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