Equities tumble on oil drop, but finish well off lows
By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets staged a late rebound along with oil prices on Wednesday to cut declines from 2-1/2 year lows, but remained on pace for one of the most dismal monthly performances on record.
Oil prices tumbled once again after the International Energy Agency warned Tuesday the market could "drown in oversupply" and on concerns about the impact of a slowing China on global economic growth. The rout in oil prices has prompted spending cuts and layoffs in the energy sector and sparked concerns about the impact of energy loans on the banking sector.
Indexes managed to rebound from steep losses, however, as new front month March futures CLc2 and Brent LCOc1 pared declines.
"If you look at crude prices, they are shooting right back up, so I would say you can blame whatever is in equities to crude because they are incredibly highly correlated," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.
"There is no doubt that is why equities are going up."
Wall Street ended with declines of more than 1 percent after tumbling more than 3 percent during the trading session. Healthcare .SPXHC was the only one of the 10 major sectors in positive territory while the energy sector .SPNY cut losses in half to finish down 2.9 percent.
The Dow Jones industrial average .DJI fell 249.28 points, or 1.56 percent, to 15,766.74, the S&P 500 .SPX lost 22 points, or 1.17 percent, to 1,859.33 and the Nasdaq Composite .IXIC dropped 5.26 points, or 0.12 percent, to 4,471.69.
The MSCI World equity index .MIWD00000PUS lost 2 percent after falling as much as 3.4 percent its lowest level since June 2013. The index has already dropped 10.5 percent in January, which if sustained would be the worst monthly loss since October 2008, the month after Lehman Brothers went bankrupt. Continued...