Dow Jones Industrial Average Drops Amid Low Commodity Prices; US Jobs Data Strengthens Signal For A December US Rate Hike

This story was updated at 4:34 p.m. EST.

U.S. stocks closed lower Thursday as low commodity prices and energy stocks weighed on sentiments. Lackluster corporate news out of Europe, concern over slowing China growth and the possibility of a U.S. rate hike pushed down global markets. It was the worst session on Wall Street since September, Reuters reported.

On a brighter note, demand for U.S. labor is still near its record high, monthly Department of Labor data released Thursday showed.

There were 5.5 million U.S. job openings in the U.S. in September, up by a near-record 3.7 percent compared to the same month last year. July’s 3.8 percent growth in job openings was a historic record. The biggest jumps in help wanteds was in business services and retail trade.

“Those increases more than offset very modest declines in the job openings rates in the construction and manufacturing sectors,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note after the numbers were released.

The good news in job openings comes after a much bigger than expected jump in October employment, which increased by 271,000. Weekly U.S. jobless claims data released Thursday also showed lower than expected unemployment insurance claims. Positive trends in the U.S. labor market help build the case for a U.S. interest rate hike next month.

The Dow Jones Industrial Average (INDEXDJX:.DJI) dropped Thursday by 254.15 points, or 1.44 percent, to 17,448. The Standard & Poor's 500 index (INDEXSP:.INX) lost 29.03 points, or 1.40 percent, to 2,046. The Nasdaq composite (INDEXNASDAQ:.IXIC) fell 61.94 points, or 1.22 percent, to 5,006.

All 10 S&P 500 sectors were down, led by the materials and energy sectors. Aerospace company United Technologies Corp. (NYSE:UTX) led gains by the closing bell Thursday among the 30 Dow components while construction equipment maker Caterpillar Inc. (NYSE:CAT) led declines.

Global Markets

Asian stocks were mixed Thursday, with Hong Kong’s Hang Seng index reporting its best gain in a month, up 536.75 points, or 2.4 percent, to 22,889, on optimism the Hong Kong stock exchange would establish a trading link with its mainland neighbor exchange just to the north in Shenzhen before the end of the year. The Shanghai Composite Index lost 17.35 points, or 0.48 percent, to 3,633, while the Japanese Nikkei was rose a slight 6.38 points, or 0.03 percent, to 19,698.

European shares were headed to a down day on weak corporate earnings and a signal from Mario Draghi, the European Central Bank president, that the eurozone could still need further economic stimulus to stave off deflation. London’s FTSE lost 118.52 points, or 1.88 percent, to 6,179. The French CAC 40 shed 95.86 points, or 1.94 percent, to 4,857 while the German DAX retreated by 125.24 points, or 1.15 percent, to 10,783.

Oil Prices

Oil futures hit a 2 1/2-month low Thursday after weekly data showed U.S. crude inventories continued to rise. West Texas Intermediate crude oil, the U.S. benchmark for oil prices, lost 3.05 percent to $41.62 per barrel for December delivery on the New York Mercantile Exchange. Brent crude, the global benchmark for oil prices, lost 3.65 percent to $44.14 on the London ICE Futures Exchange.

Q3 Earnings Season Market Movers

Kohl's Corp. (NYSE:KSS), the nation’s second-largest department store after Macy’s, reported before markets opened in New York Thursday better-than-expected sales and profit in the three months ending October. The Wisconsin company also beat analysts’ forecast on same-store sales, a key retail metric. Kohl’s grew sales to $4.43 billion in the quarter, from $4.37 billion. Net income dropped to $120 million, or 63 cents per share, from $142 million, or 70 cents per share. Adjusted to exclude expenses related to lowering the company’s debt, the underlying profit grew by $2 million, to $144 million, or 75 cents per share. Kohl’s stock rallied by 6.12 percent to $45.80 by Thursday’s closing bell. The company’s shares are down about 24.97 percent for the year. After years of rapid growth since 2010, Kohl’s sales have dropped more recently. Late last year the company announced a multiyear growth strategy that includes adjusting merchandise mixes based on local tastes and stocking more popular national brand names.

Viacom Inc. (NASDAQ:VIAB) said Thursday morning its revenue dropped to $3.79 billion in the July-September quarter, from $3.99 billion in the same period last year. Net income rose to $884 million, or $2.21 per share, from $732 million, or $1.72 per share. The owner of MTV, Comedy Central and Nickelodeon beat analysts’ profit forecasts but missed on revenue. Viacom’s shares rose 0.89 percent to $49.79 on Thursday. The company’s share price is down 33.83 percent for the year.

Popeyes Louisiana Kitchen Inc. (NASDAQ:PLKI) stock jumped 6.67 percent to $54.56 on Thursday after the Atlanta chicken chain reported Wednesday after markets closed better-than-expected profits and raised its sales and profit forecasts for the year. Popeyes increased its revenue for the three months ending September to $61.1 million, from $54.9 million last year. Net profit increased to $10.6 million, or 46 cents per share, from $9.8 million, or 42 cents per share. Popeyes’ share price is down 3.03 percent for the year.

Helmerich & Payne Inc. (NYSE:HP) shares dropped 3.57 percent to $53.44 on Thursday after the Tulsa, Oklahoma, oilfield services company reported a miss on profit and despite beating its revenue expectations. Company sales dropped in the July-September quarter, to $566.1 million from $985 million in the same period last year, thanks to low oil prices. The company reported a loss of $21.2 million in the quarter, or 20 cents per share, down from a gain of $192.3 million, or $1.59 per share, in the year-ago period. A reduction in U.S. oil rig counts has pushed down demand for the company’s services, which has pushed its share price down 20.75 percent for the year.

Anheuser Busch Inbev SA (EBR:ABI) shares rose 0.36 percent to $112.40 euros ($121.62) Thursday after the Belgium-based world’s biggest brewer officially launched on Wednesday its $107.7 billion bid for London’s SABMiller plc (LON:SAB). To allay U.S. antitrust concerns AB InBev said it would sell SABMiller’s stake in MillerCoors. This avoids putting to two of America’s most ubiquitous brands -- Budweiser and Coors -- under one roof. Ab InBev’s share price is up 19.75 percent for the year. SAB Miller’s stock is up by about the same.