U.S. stocks turned lower Monday as the financial markets reckon with ever-cheaper oil and prepare for the start of another earnings season. Following last week’s volatile trading week, the Dow dropped as much as 150 points in the morning session.
This week, economists are preparing to sort through a slew of data points and earnings announcements that will reveal the overall health of the U.S. economy. The U.S. Federal Reserve is scheduled to release its “Beige Book” Wednesday, followed by the government’s monthly retail sales figures and two key inflation gauges. Earnings season unofficially kicks off this week with aluminum producer Alcoa Inc. scheduled to post its latest quarterly results Monday, followed by the six major U.S. banks later in the week.
On Monday morning the Dow Jones Industrial Average, which measures the share prices of 30 large industrial companies, tumbled 118.26 points, or 0.67 percent, at 17,619.11; the S&P 500 stock index lost 18.40 points, or 0.90 percent, at 2,026.22. The Nasdaq Composite fell 44.35 points, or 0.95 percent, at 4,658.73.
Manhattan-based Alcoa is slated to post results after the U.S. markets close Monday, with overall fourth-quarter earnings forecast to grow by 4 percent compared with a year earlier, according to analysts polled by Thomson Reuters.
Analysts anxiously await the Fed's next Beige Book, which the central bank publishes eight times a year, highlighting the current condition of the U.S. economy within the central bank's 12 districts. The previous Beige Book, published in December, revealed that plunging oil prices over the last six months are starting to have negative effects in regions that operate heavily within the energy industry as well as chemical manufacturers. The drop in oil prices over the past six months is being felt most in three of the Fed’s 12 districts, including Dallas, Minneapolis and Kansas City, according to the Fed's last report in December.
Economists will also get an overall picture of how consumers spent their money during the holiday shopping season, as retail sales for December are issued Wednesday. Following mixed reviews of initial Black Friday and Thanksgiving weekend sales, data last month revealed that consumers picked up their spending, boosted by a drop in gasoline prices. However, economists expect December retail sales to decline 0.10 percent after rising 0.70 percent in November, according to Reuters data.
U.S. gas prices hit their lowest level since April 2009, according to a survey released Sunday by independent market research company Lundberg Survey Inc. Prices for regular-grade gasoline declined to $2.20 a gallon and the average price of a gallon of gasoline in the U.S. fell 27 cents in the past three weeks, per the survey ended Jan. 9, compared with the Dec. 19 survey.
The drop in gasoline prices have been primarily driven by the 55 percent decline in global oil prices over the past six months. Gas prices are now down more than $1.14 a gallon from the same period a year ago. "The crude oil market was the driving force because of the ongoing supply-and-demand situations," Trilby Lundberg, president of Lundberg Survey, said in the report.
U.S. crude oil prices dipped below $46 a barrel Monday for the first time since April 2009, only to edge up over $46 in early trading. West Texas Intermediate crude, the benchmark for U.S. oil prices, dropped 4.38 percent Monday to $46.24 a barrel, for Feb. 15 delivery, on the New York Mercantile Exchange. Brent crude, the global benchmark for oil prices, dropped 2.34 percent Monday to $47.77 a barrel, for Feb. 15 delivery, on the London ICE Futures Exchange.
The U.S. Department of Labor is scheduled to release two key inflation gauges on Thursday and Friday. The Producer Price Index, which measures U.S. wholesale prices, is slated for release Thursday. The Index declined 0.2 percent in November after rising 0.2 in October, the U.S. Bureau of Labor Statistics said last month, giving some Federal Reserve officials pause as they debate whether to hike interest rates next year.
Friday will see the relase of the Consumer Price Index, which previously showed U.S. consumer prices posted their biggest drop in almost six years last month as gasoline prices continued falling due to the global drop in crude oil prices. Because inflation remains below the Fed’s target, most economists don’t expect the central banks to raise rates before the middle of 2015.
Here's the latest economic calendar for the week of Jan. 12. All listed times are EST.
Monday, Jan. 12
10 a.m. -- Labor Market Conditions Index (Dec.)
Tuesday, Jan. 13
9 a.m. -- NFIB Small Business Index (Dec.)
10 a.m. -- Job Openings (Nov.)
2 p.m. Federal Budget (Dec.)
China -- New Loans (Dec.)
U.K. -- Consumer Price Index (Dec.)
Wednesday, Jan. 14
8:30 a.m. -- Retail Sales (Dec.)
8:30 a.m. -- Import Prices (Dec.)
10 a.m. -- Business Inventories (Nov.)
2 p.m. -- Federal Reserve Beige Book
JPMorgan Chase & Co.; Wells Fargo & Co.
Thursday, Jan. 15
8:30 a.m. -- Weekly Jobless Claims (Jan. 9)
8:30 a.m. -- Producer Price Index (Dec.)
8:30 a.m. -- NY Empire State Manufacturing Index (Jan.)
10 a.m. -- Philadelphia Fed Manufacturing Survey (Jan.)
Australia -- Unemployment Rate (Dec.)
Bank of America Corp.; Citigroup Inc.
Friday, Jan. 16
8:30 a.m. -- Consumer Price Index (Dec.)
9:15 a.m. -- Industrial Production (Dec.)
9:15 a.m. -- Capacity Utilization (Dec.)
9:55 a.m. -- Consumer Sentiment (Jan.)
European Union -- Consumer Price Index (Dec.)
Goldman Sachs Group Inc.