Slump in oil weighs on equities in volatile session

By Ryan Vlastelica
Traders are pictured at their desks in front of the German share price index DAX board at the Frankfurt stock exchange on January 12, 2015. REUTERS/Remote/Stringer

By Ryan Vlastelica

NEW YORK (Reuters) - Most stock markets around the world fell on Monday as oil prices showed no sign of breaking their prolonged downward spiral, prompting further losses in beleaguered energy shares.

Losses were broad in the U.S. equity market, with nine of the 10 primary S&P 500 sectors ending lower. Energy <.SPNY> was by far the weakest group, off 2.8 percent. The sector is now down more than 25 percent from a high reached in July.

U.S. crude futures slumped 5.2 percent to $45.87 per barrel, the lowest level since 2009, while Brent crude lost 5.6 percent as Goldman Sachs slashed its short-term price forecasts and Gulf producers showed no signs of curbing output.

Wall Street opened slightly higher, suggesting a rebound from a two-week decline that had taken the S&P 500 into negative territory for the year. But the weight of the energy drag overtook any optimism about the upcoming earnings season.

"There's a lot of confusion and concern about the impact of energy prices," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

S&P 500 earnings are forecast to have risen 4 percent in the fourth quarter, according to Thomson Reuters data, sharply under the 11.1 percent growth rate forecast on Oct. 1. Energy profits are seen dropping by more than 20 percent.

"What everybody is concerned about is what managements are going to say about crude oil and about global economies," Ghriskey said.

Tiffany & Co on Monday cut its full-year forecast, citing a decline in holiday sales from the prior year. The stock plunged 14 percent.

The Dow Jones industrial average <.DJI> fell 96.53 points, or 0.54 percent, to close at 17,640.84, the S&P 500 <.SPX> lost 16.52 points, or 0.81 percent, to 2,028.29 and the Nasdaq Composite <.IXIC> dropped 39.36 points, or 0.84 percent, to 4,664.71.

The MSCI International ACWI Price Index <.MIWD00000PUS> fell 0.4 percent. European shares <.FTEU3> closed up 0.6 percent, after a volatile session bracketed by losses of 0.4 percent and gains of 1.1 percent.

The U.S. dollar index <.DXY> edged up less than 0.1 percent against a basket of currencies, while the euro was little changed at $1.1836. The yen rose 0.1 percent against the dollar.

Gold prices rose 0.2 percent while silver gained 0.2 percent. Copper lost 1.2 percent in its fourth straight daily decline.

In the bond market, the benchmark 10-year U.S. Treasury note traded up 16/32 in price to yield 1.9121 percent. Spanish and Italian 10-year yields slipped after Italy's central bank chief said on Sunday the risk of deflation in the euro zone should not be underestimated. He said the best way to tackle the problem was to buy government bonds.

(Reporting by Ryan Vlasterlica; Editing by Dan Grebler)