Markets Brace For Big Oil Profit Plunge
NEW YORK (AP) — It's just a forecast, and for only one of 10 industry groups in the stock market. Yet it has almost singlehandedly turned what had been a strong earnings season into a weak one.
Profits for companies in the Standard & Poor's 500 index are expected to have grown in the fourth quarter at one of the lowest rates in years, just 2.2 percent. The culprit: Energy companies that suffered as oil prices plunged. Their profits are expected to have dropped 23 percent, a collapse of fortune nearly unheard of outside of a recession, and one that has weighed on the stock market.
Investors will find out just how ugly the earnings are as oil companies report results over the next several days.
So far, things don't look so good. Several oil producers and service companies have announced layoffs and reductions in spending on new drilling projects. BP told workers Monday that it would freeze pay for 2015. On Friday, Chevron posted a 30 percent decline in fourth-quarter profit, a day after Royal Dutch Shell reported a 57 percent drop.
Stocks in energy companies have fallen nearly 12 percent in three months, nearly cancelling out moves up for most other industries. The S&P 500 is up less than 1 percent in that time.
Exxon Mobil reports its results on Monday, followed by BP on Tuesday.
Big Oil, Big Impact
Lower oil prices are good for the economy and most businesses, but they are bad for the stock market in the short term. Energy companies have an outsized effect on the S&P 500 index because they are among the most valuable members of it.
Instead of giving equal weight to each of the companies, the S&P 500 ranks them according to their market value. Exxon Mobil, worth $385 billion, is about 10 times the average value of a company in the index
123
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension