NEW YORK—Another drop in the price of oil rattled stock investors around the world on Friday, with steep losses in Europe and the US, where a major market index ended its worst week since the summer.
The selling in the US was broad, with all 10 sectors of the Standard and Poor’s (S&P) 500 index ending down. Oil and gas companies lost the most. Southwestern Energy plunged 14 percent and Chesapeake Energy sank 9 percent.
Investors sought refuge in bonds. Treasury prices rose, sending yields lower. Another measure of anxiety, the so-called Vix index, jumped. It is now up 70 percent in just five days.
Investors worry the sharp fall in the price of oil and other commodities is a sign of weakness in the global economy, especially China, and that will cut into profits at big energy producers and suppliers of raw materials, as well as other companies.
“We’re stockpiling commodities and demand is not picking up,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors. “It’s kind of a depressing market.”
Investors are looking ahead to a Federal Reserve meeting next week where the central bank is widely expected to announce an increase in its benchmark interest rate from a record low.
Recent economic reports indicate that the US economy is healthy enough to withstand a rate hike, but investors are still nervous because it would be the first rate rise in nearly a decade.
Investors are also focusing on a batch of reports illuminating the state of China’s economy, which has been struggling with a stubborn slowdown in growth.
Statistics released in Beijing on Saturday provided reasons for optimism as China’s retail sales in November rose 11.2 percent from the prior year, the largest jump of 2015. Factory output increased 6.2 percent in November, the biggest gain since June. But real-estate investment remained weak, edging up just 1.3 percent during the first 11 months of the year. China’s government is scheduled to release another key report on foreign direct investment on Wednesday.
The trouble on Friday began with a report from the International Energy Agency that said the oversupply in oil would persist until late next year even as demand continues to weaken. Benchmark US crude plunged $1.14, or 3 percent, to close at $35.62 a barrel in New York. It has been falling for one-and-a-half years and is now at its lowest level since early 2009.
By the end of the day, the S&P 500 index had lost 39.86 points, or 1.9 percent, to 2,012.37. It was down 3.8 percent for the week, its worst showing since August.
The Dow Jones industrial average lost 309.54 points, or 1.8 percent, to 17,265.21. The Nasdaq composite declined 111.71 points, or 2.2 percent, to 4,933.47.
In Europe, Germany’s DAX lost 2.4 percent, Britain’s FTSE 100 dropped 2.2 percent and France’s CAC 40 shed 1.8 percent.
Investors were also rattled by trouble in a risky corner of the credit markets where bonds from heavily indebted companies are traded.