U.S. Stocks Hurt By Oil's Slide

U.S. stocks fell hard Friday, nearing six-month lows, as global markets reacted to crude's slide below $30 a barrel and Chinese shares stumbling into a bear market.

In the first nine days of trading this year, stocks around the world have lost a total of $5.7 trillion, roughly equivalent to the GDP of France and the U.K. put together, according to Bank of America Merrill Lynch.

Weaker-than-expected U.S. retail sales further dampened investor sentiment.

"Higher rent and healthcare costs and the desire to save more continue to more than offset the savings from lower gasoline costs," emailed Peter Boockvar, a noted bear and chief market analyst at the Lindsey Group. "Any further weakness in consumer spending (today's data does not include spending on services keep note) raises the recession odds."

 As of 11:35 a.m. ET, the Dow industrials (DJI) were down 366 points, or 2.2 percent, to 16,013. The S&P 500 (SPX) dropped 42 points, or 2.2 percent, to 1,880, with energy and technology pacing losses among its 10 major industry groups, all 10 of which were in in the red. The NASDAQ Composite (COMP) shed 135 points, or 2.9 percent, to 4,480.

The price of U.S. crude fell under $30 a barrel, while the yield on the 10-year Treasury note used to figure mortgage rates and other consumer loans dropped under 2 percent for the first time since October.
Oil's plummet to a 12-year low has roiled global markets amid worries that Chinese policy moves are not succeeding in bolstering growth in the the world's second-biggest economy.

Analysts, including Boockvar, say the current scenario changes the dynamics for inflation, and lessens the odds of interest rate hikes by the Fed this year.

"Let's put a nail in the March rate hike coffin. Rate hike odds are down to 16 percent, half of what it was two days ago," wrote Boockvar. "There is now less than 100 percent chance that we will get any rate hike this year. The December fed funds futures contract is priced at .595 percent which implies an 82 percent chance."