Oil keeps diving — and it’s taking Wall Street with it. The Dow plunged 540 points on Wednesday after crude oil plummeted another 7% and crashed below $27 a barrel. The S&P 500 slumped 3.5% to its lowest intraday level since October 2014. The Nasdaq is down another 3.5%.
It’s the latest blow in what’s already been the worst start to a year on record for the stock market. The Dow is now down more than 11% in 2016.
“Despite improving valuations, global equities continue to get hammered,” Bespoke Investment Group wrote in a client note. The firm said the appetite for risk remains “awful.”
Turmoil in China and the crash in crude oil prices remain the main culprits for the market mayhem. While China’s stock market dropped “only” 1% overnight, the energy market was considerably less quiet.
Oil prices crashed another 7% on Wednesday and broke below $27 a barrel for the first time since September 2003. It’s currently trading at $26.30 a barrel, down an incredible 29% since the beginning of the year.
Crude oil has been slammed in recent days by concerns over sanctions lifting on Iran, which is expected to flood the world with more oil at exactly the worst time, given the supply glut.
“Sentiment has certainly turned sharply negative. Markets are probably not likely to stabilize until oil finds a bottom,” David Joy, chief market strategist at Ameriprise Financial, wrote in a client note.
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