Oil company debt rejig talk hits Wall Street

Wall Street was deep in the red in volatile trading on Monday, as technology stocks continued to sell off and oil prices remained under pressure, sending investors scurrying to safe-haven assets.

The technology-heavy Nasdaq Composite fell nearly three per cent to its lowest since October 2014, weighed down by Microsoft, Amazon and Facebook, while the Dow Jones industrial average shed more than 350 points.

“Equities are in a ‘go-nowhere-fast’ mode, with a downward bias in the near term,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.

Crude oil prices eased from their session lows, but were still down about one per cent.

Chesapeake was the latest casualty of lower energy prices, tumbling 30 per cent to $2.14 after sources told Reuters that the natgas company had hired restructuring lawyers. The stock halved before being halted earlier. Chesapeake said it has no plans to pursue a bankruptcy.

Demand for crude is considered a barometer for global economic health, and markets across the world have closely tracked the rise and fall in the price of the oversupplied commodity this year.

Gold prices rose to their highest since June and the yield on 30-year US treasuries hit their lowest since April.

At 11:31 am ET, the Dow was down 343.38 points, or 2.12 per cent, at 15,861.59. The S&P 500 was down 40.79 points, or 2.17 per cent, at 1,839.26.

The Nasdaq Composite index was down 119.32 points, or 2.73 per cent, at 4,243.82. The index is on track for its worst two-day fall since August.

The CBOE volatility index, seen as a measure of Wall Street’s fear, was up 14.5 per cent, its biggest jump in a month.

All 10 major S&P sectors were down, with the 3.05 per cent fall in financial stocks leading the decliners as they followed European banks lower. Goldman Sachs’ 5.6 per cent drop was the biggest drag. The index, down 15 per cent for the year is the worst performing among the 10 sectors on increasing uncertainty about when the Federal Reserve will raise rates again.

Investors have also been worried about the unraveling of rich valuations in a narrow group of stocks that led the market higher through most of 2015. “What you’ve seen regarding technology and other sectors is that the (higher) valuations are being ratcheted back down closer to the underlying fundamentals that are going to support their growth, if its there,” said Ryan Larson, head of US equity trading at RBC Global AMC.

Microsoft’s 2.7 per cent decline to $48.87 also dragged down the S&P 500. Facebook and Ama-zon were off about four per cent, while Alphabet dropped two per cent.