US stocks tumble on geopolitical tensions, diving oil

New York, Jan 7 (IANS) The US stocks suffered big losses on Wednesday as rising geopolitical tensions and sinking oil prices weighed on investor sentiment.

The Dow Jones Industrial Average slumped 252.15 points, or 1.47 percent, to 16,906.51. The S&P 500 dropped 26.45 points, or 1.31 percent, to 1,990.26. The Nasdaq Composite Index lost 55.67 points, or 1.14 percent, to 4,835.77, Xinhua news agency reported.

Wall Street was nervous after the North Korea announced it successfully carried out its first hydrogen bomb test Wednesday.

Over the weekend, Saudi Arabia cut off diplomatic ties with Iran after angry protesters stormed its embassy in Tehran, the capital of Iran, to protest against Saudi’s execution of prominent Shiite cleric Sheikh Nimr Baqir al-Nimr.

Analysts said the heightened geopolitical tensions sent traders scurrying from stocks into safe haven assets.

Also, oil prices hit their lowest level in more than 11 years on Wednesday as the US crude output of last week increased unexpectedly, which in turn dampened market sentiment.

Dragged by plummeting oil prices, the energy sector, the biggest laggard among the S&P 500’s ten sectors, slumped 3.62 percent on Wednesday.

On the economic front, according to the minutes from Federal Reserve’s December meeting, the central bank decided to raise rates for the first time in nearly a decade, though some officials expressed concerns about lingering low inflation and the stifling effects on the US economy of a strong US dollar and slow growth overseas.

Fed members expected economic conditions would evolve in a manner that would warrant only gradual increases in the federal funds rate, said the minutes.

Meanwhile, the US private companies added 257,000 jobs in December, up from 211,000 jobs in November, said the National Employment Report released jointly by Automatic Data Processing (ADP) and Moody’s Analytics Wednesday. The latest ADP figure is the best monthly performance in 2015.

The goods and services deficit was $42.4 billion in November, down $2.2 million from the revised level of $44.6 billion in October, the US Commerce Department reported on Wednesday.

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