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BUSINESSFriday 8 January 2016
Stocks slump the most in 3 months on China worries Saudi Arabia says
MARLEY JAY
AP Markets Writer
NEW YORK (AP) — Stocks
and oil prices plunged
again Thursday on spread-
ing fears that China’s
economy, a major engine
of global growth, is sputter- traders worried that weak-
ing.
It was the worst one-day
drop since late Septem-
ber, and the main U.S.
benchmark, the Standard
& Poor’s 500 index, has
now had its worst four-day
Trader Gregory Rowe works on the floor of the New York Stock Exchange. Stocks and oil prices
plunged again Thursday on spreading fears that China’s economy, a major engine of global
growth, is sputtering.
opening of a year in history. iPhones and other electron-
The latest bout of market
volatility came after Chi-
na allowed its currency to
weaken further, a danger-
ous omen for the world’s
second-largest economy.
That helped set off a 7
percent plunge in China’s
main index, causing trad-
ing to be halted after just
Constellation Brands tops Street 3Q forecasts an IPO but that merely rais-
VICTOR, N.Y. (AP) — Shares
of beer and wine maker
Constellation Brands rose
nearly 5 percent on Thurs-
day after reporting fiscal
third-quarter results that
beat expectations and
raised its earnings outlook
for the year.
The company also said it
would build a new brewery
in Mexicali, Mexico as de-
mand for imported Mexi-
can beer remains strong.
Constellation owns Co-
30 minutes.
The malaise spread across
continents, sending index-
es sharply lower in the U.S.
and Europe. The price of
U.S. crude oil plunged to its trading halts that were put
lowest level since 2004 as
ness in China would trans-
late into lower global de-
mand for energy.
The selling in the U.S. has
been concentrated in
technology stocks, which
could suffer if demand for
ics weakens. Apple sank 4
percent and has now fallen
27 percent since July.
Thursday’s drop pushed
the tech-heavy Nasdaq
composite index into what
market watchers call a
“correction,” or a drop of
10 percent from a recent
peak. The Nasdaq has fall-
rona, Negra Modelo and
Pacifico beers.
“Today’s third quarter re-
sults continue to reflect
positively for the future of
Constellation’s beer seg-
ment,” wrote Citi analyst
Wendy Nicholson. But she
added “we stand by our
assertion that the stock is
relatively expensive at its
current valuation and we
maintain our Neutral rat-
ing.”
On a per-share basis, the
en for six days straight. The Nasdaq composite in-
China could be in store for dex dropped 146.34 points,
more declines after that or 3 percent, to 4,689.43.
country’s market regula- While the Nasdaq is so far
tor suspended automatic the only major U.S. index
to enter a correction, the
in place Jan. 1. Those halts, other two are getting close.
which were triggered twice The Dow average is down
this week, are increasingly 9.8 percent from its peak
seen as inadequate mea- in May, and the S&P 500
sures to prevent volatility. index has lost 8.8 percent
“The management of the since then.
Chinese economy is the European markets also
real concern,” said John dropped. Germany’s DAX
Canally, chief economic slid 2.3 percent, France’s
CAC 40 gave up 1.7 per-
cent and Britain’s FTSE 100
lost 2 percent.
The price of U.S. crude oil
dipped to 12-year lows as
(AP Photo/Richard Drew) investors worried world-
wide demand will fall even
strategist at LPL Financial. further. It sank 70 cents, or
“All that matters for markets 2.1 percent, to $33.27, its
right now is ‘China can’t lowest close since Febru-
get their act straight.’ “ ary 2004. Brent crude, the
The Dow Jones industrial benchmark for interna-
average sank 392.41 points, tional oils, lost 48 cents to
or 2.3 percent. At one point $33.75 a barrel in London.
it was down 442 points, or Brent is trading at 11-year
2.6 percent. lows.
The S&P 500 index gave up Apple, the world’s largest
47.17 points, or 2.4 percent. publicly traded company,
had its biggest loss in four
months and fell to its low-
est price since October
2014. Financial stocks also
slumped. Citigroup gave
up $2.56, or 5.1 percent, to
$47.56.
Aerospace company Boe-
ing fell $5.82, or 4.2 per-
cent, to $133.01 and rail-
road operator Union Pacif-
ic felt $1.75, or 2.3 percent, Aramco range from listing
to $73.08.
2016 has started with a se-
ries of warning signs about
China’s economy. Those
worries about China have
drowned out signs that
the economies of the U.S.
and Europe are doing fairly
well.q
Victor, New York-based riod, also beating Street
company said it earned forecasts.
$1.33. Earnings, adjusted for Three analysts surveyed by
non-recurring costs, came Zacks expected $1.62 bil-
to $1.42 per share. lion.
The results exceeded Wall Constellation Brands ex-
Street expectations. pects full-year earnings in
The average estimate of the range of $5.30 to $5.40
seven analysts surveyed by per share.
Zacks Investment Research Its shares rose $4.94, or 3.5
was for earnings of $1.29 percent, to $148.09 in af-
per share. ternoon trading Thursday.
The wine, liquor and beer Its shares are up 44 percent
company posted revenue from a year ago.q
of $1.64 billion in the pe-
it may launch IPO
for Saudi Aramco
NEW YORK (AP) — Saudi
Arabia may launch an ini-
tial public offering for the
world’s largest oil produc-
er, Saudi Arabian Oil Co.,
according to a report.
Deputy Crown Prince Mu-
hammad bin Salman told
The Economist that a de-
cision will be made in the
next few months. The crown
prince is widely thought to
hold considerable power
in the monarchy and also
heads the defense ministry.
“I believe it is in the interest
of the Saudi market, and
it is in the interest of Aram-
co,” he said.Saudi Arabia is
dealing with the economic
punch declining oil prices
have taken on the coun-
try. On Thursday pricing
fell below $35 per barrel,
its lowest point since 2004.
There’s also rising tension
between Saudi Arabia and
Iran after the execution of
a Shiite cleric and attacks
on Saudi diplomatic posts
in the Islamic Republic.
Exxon Mobil Corp.’s mar-
ket value is more than $300
billion, and Saudi Aramco
produces three times as
much oil, Gheit said. He fig-
ures Aramco could sell off
a 20 percent minority inter-
est and raise $200 billion.
The Economist said that
options under preliminary
consideration for Saudi
some of its petrochemical
and other refining opera-
tions to selling shares in the
parent company.
But not everyone considers
the IPO a done deal.
Larry Goldstein of the En-
ergy Policy Research Foun-
dation believes that the
Saudis will back away from
ing the possibility sends sig-
nals to their own people
and the outside world.
“They are willing to explore
things that they haven’t
been willing to seriously
consider before, including
for the first time raising in-
ternal prices” for gasoline
and diesel, Goldstein said.
Within Saudi Arabia, the
IPO comments are a signal
“to those who have been
living very comfortably
off the government that
things have to change,”
he said.q