Wall St falls as oil and energy shares weaken

Australian stocks are set to open lower after US crude oil fell into a bear market, weighing on the US energy sector.

US stocks were treading water as oil prices dropped. Picture: Kena Betancur/Getty Images/AFP.

Losses in energy shares helped drag US stocks lower overnight as the price of oil retreated to near $US40 a barrel.

European shares also dipped amid disappointing manufacturing data and a stress test of European banks.

The falls are set to weigh on the Australian share market, with ASX futures 25 points lower at 6.25am (AEST).

Energy stocks in the S & P 500 fell 3.4 per cent, on pace for their worst day since the end of June, and US crude oil lost 3.7 per cent to $US40.06 a barrel. A glut of fuels and growing global production has weighed on crude prices recently, pulling oil down more than 20 per cent since June 8 and into a bear market.

Some investors and analysts said that while falling oil prices are likely to continue to hurt energy companies, the continuing oversupply of crude suggests they don’t represent greater problems with slowing economic growth worldwide, which would be more worrisome for stocks.

“It should not be taken as a sign the global economy is weak,” said David Kelly, chief global strategist at J.P. Morgan Asset Management. “The global economy is not booming, but the oil market isn’t telling us anything we didn’t already know.”

The Dow Jones Industrial Average fell 28 points, or 0.2 per cent, to 18405. The S & P 500 slipped 0.1 per cent, while the Nasdaq Composite Index rose 0.4 per cent.

Energy companies were among the biggest decliners in the Dow industrials, with Exxon Mobil falling 3.5 per cent and Chevron losing 3.3 per cent. Diamond Offshore Drilling slid 7.7 per cent and Transocean fell 6.7 per cent in the S & P 500.

The losses in energy shares offset further gains in health care and technology stocks. Health care stocks in the S & P 500 climbed 0.6 per cent while technology shares increased 0.4 per cent. The sectors have gained 4.9 per cent and 8.1 per cent in the past month respectively.

Elsewhere, Tesla announced it would buy SolarCity for $US2.6 billion in an all-stock deal. SolarCity shares were off 7.4 per cent, while Tesla’s fell 2 per cent.

Verizon said it would acquire mobile workforce solutions company Fleetmatics Group for $US2.4 billion. Verizon shares lost 1.6 per cent, while Fleetmatics’ stock surged by 39 per cent.

The Stoxx Europe 600 fell 0.6 per cent. Banks led losses, with the sector falling 1.8 per cent in the wake of Friday’s stress tests results, which gave most lenders a clean bill of health.

Earlier, data painted a mixed picture of China’s manufacturing sector, with one measure showing larger, state-owned companies lagging and another indicating gains for smaller, private companies. The Shanghai Composite Index fell 0.9 per cent.

Japan’s Nikkei Stock Average rose 0.4 per cent as the yen pulled back from recent gains against the dollar.

The dollar was recently up 0.3 per cent against the yen at Yen102.3720, after the yen rose sharply Friday following the Bank of Japan’s surprisingly moderate monetary easing announcement.

Dow Jones