Stock market falls again, pulled down by falling oil prices

Stocks fell again on Friday, November 23, pulled down by the falling price of oil. The broadest major stock market index, the Standard & Poor’s 500, which measures the prices of 500 large U.S. corporations, officially entered correction territory, by closing more than 10% below its all-time high. This has been the worst week for the stocks in the S&P 500 in 80 years.

Pulling down the stock market was an almost 8% fall in the price of oil, which closed just above $50 a barrel. Oil prices have fallen by nearly one-third since their last high in October. The falling price of oil has been led by the surging production of U.S. oil, fed by the boom in fracking (hydraulic fracturing).

The United States just regained the status of being the world’s largest producer of oil, passing both Saudi Arabia and Russia. Just last month, the United States became a net energy exporter with small net imports of oil more than offset by exports of gasoline and other oil products as well as growing amounts of natural gas. In the past, when the United States was a large oil importer, a fall in the price of oil was an overall boost to the economy. But today, the benefits of cheaper oil and gasoline are largely offset by a slowdown in the domestic oil industry affecting employment and business investment.

Technology stocks were also weak, with the stock of Apple off 25%. Technology companies dominate the NASDAQ index, which is off almost 15%, about three-quarters the way to a bear market, when the stock market is down 20%.