Drop In Oil Prices Continues To Weigh On Wall Street - U.S. Commentary

(RTTNews) - While selling pressure has remained somewhat subdued, stocks have moved mostly lower in early trading on Friday. The major averages have all slid into negative territory after ending the previous session moderately higher.

Currently, the major averages remain in the red, although the Nasdaq is down only 8.10 points or 0.2 percent at 4,700.06. The Dow is down 97.04 points or 0.6 percent at 17,499.30 and the S&P 500 is down 8.70 points or 0.4 percent at 2,026.63.

The early weakness on Wall Street is partly due to a continued decrease by the price of crude oil, with crude for January delivery tumbling $1.39 to $58.56 a barrel after ending the previous session below $60 a barrel for the first time in over five years.

Concerns about oil demand are contributing to the continued decline after the International Energy Agency cut its outlook for 2015 global oil demand growth by 230 000 barrels per day to 0.9 million barrels per day.

The recent sell-off by the price of crude oil has led to some worries about how the drop in prices will affect the U.S. economy as a whole.

While lower gas prices may boost consumer spending in other areas, the drop in prices will hurt the oil and gas industry, which had been a major source of growth.

Nonetheless, a report from Thomson Reuters and the University of Michigan showing a bigger than expected jump in consumer sentiment has helped to limit the downside for the markets.

The report said the preliminary reading on the consumer sentiment index for December came in at 93.8 compared to the final November reading of 88.8. Economists had expected the index to show a more modest increase to 89.5.

With the much bigger than expected increase, the consumer sentiment index reached its highest level since January of 2007.

Defense stocks are seeing considerable weakness, however, with the Philadelphia Defense Sector Index plunging by 2 percent. Esterline Technologies (ESL) is leading the sector lower after reporting disappointing fourth quarter results.

Chemicals, gold, steel, and telecom stocks are also seeing early weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index dipped by 0.3 percent.

Meanwhile, the major European markets have all come under pressure on the day. While the French CAC 40 Index has tumbled by 1.6 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both down by 1.5 percent.

In the bond market, treasuries have shown a strong move back to the upside after ending the previous session slightly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.1 basis points at 2.127 percent.