Exxon Mobil Corp. (XOM), Chevron Corp. (CVX) and other energy companies fell the most in more than two years on concern that a cut in the U.S. debt rating signals lower crude oil prices, investors and analysts said.
Exxon Mobil, based in Irving, Texas, dropped $4.63, or 6.2 percent, to $70.19 at 4 p.m. in New York Stock Exchange composite trading, wiping out its gain this year. Chevron, based in San Ramon, California, fell $7.36, or 7.5 percent, to $90.25. The one-day declines were the steepest since Dec. 1, 2008.
The downgrade of U.S. debt by Standard & Poor’s Aug. 5 crystallized recession concerns based on rising U.S. and European debt and a U.S. government report last week that those out of work 27 weeks or more comprise 50 percent of the unemployed, said James Glickenhaus, who manages about $2 billion at Glickenhaus & Co. in New York.
“People are calling up mutual funds, saying, ‘Get me out of stocks,’” Glickenhaus, said today in an interview.
Widely owned and easily traded stocks like Exxon are part of the general selloff, he said.
“This is contagion,” Donald Coxe, who manages $500 million at Coxe Advisors in Chicago, said in an interview. “Gold is going up because of fear the financial system is going to implode.”
“The S&P downgrade confirmed everybody’s fear,” Fadel Gheit, a New York-based energy analyst for Oppenheimer & Co. said today in a telephone interview. “Less confidence in the U.S. economy alone will bring the outlook for consumption lower. We’ll use less oil.”
Quicksilver Resources Inc. (KWK), based in Fort Worth, Texas, fell $2.65, or 23 percent, to $9.10, the lowest price in more than two years. The oil and natural-gas producer said it will raise spending 39 percent this year after missing its second- quarter production target.
“Every company that’s had the big increase in capital spending has generally taken it on the chin,” said David M. Heikkinen, an analyst at Tudor, Pickering, Holt & Co. in Houston who rates Quicksilver “accumulate” and owns none.
Lowering U.S. credit one level to AA+ won’t hurt Exxon Mobil’s AAA rating, the highest available, Standard & Poor’s said today in a statement, citing the company’s global and diverse business lines and its significant financial strength.
To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net
Exxon Mobil, based in Irving, Texas, dropped $4.63, or 6.2 percent, to $70.19 at 4 p.m. in New York Stock Exchange composite trading, wiping out its gain this year. Chevron, based in San Ramon, California, fell $7.36, or 7.5 percent, to $90.25. The one-day declines were the steepest since Dec. 1, 2008.
The downgrade of U.S. debt by Standard & Poor’s Aug. 5 crystallized recession concerns based on rising U.S. and European debt and a U.S. government report last week that those out of work 27 weeks or more comprise 50 percent of the unemployed, said James Glickenhaus, who manages about $2 billion at Glickenhaus & Co. in New York.
“People are calling up mutual funds, saying, ‘Get me out of stocks,’” Glickenhaus, said today in an interview.
Widely owned and easily traded stocks like Exxon are part of the general selloff, he said.
“This is contagion,” Donald Coxe, who manages $500 million at Coxe Advisors in Chicago, said in an interview. “Gold is going up because of fear the financial system is going to implode.”
Oil Falls
Gold rose $61.40 to a record $1,713.20 an ounce, up 3.7 percent at today’s close in New York. Crude oil for September delivery fell $5.57, or 6.4 percent, to $81.31, on the New York Mercantile Exchange, the lowest price since Nov. 23.“The S&P downgrade confirmed everybody’s fear,” Fadel Gheit, a New York-based energy analyst for Oppenheimer & Co. said today in a telephone interview. “Less confidence in the U.S. economy alone will bring the outlook for consumption lower. We’ll use less oil.”
Quicksilver Resources Inc. (KWK), based in Fort Worth, Texas, fell $2.65, or 23 percent, to $9.10, the lowest price in more than two years. The oil and natural-gas producer said it will raise spending 39 percent this year after missing its second- quarter production target.
“Every company that’s had the big increase in capital spending has generally taken it on the chin,” said David M. Heikkinen, an analyst at Tudor, Pickering, Holt & Co. in Houston who rates Quicksilver “accumulate” and owns none.
Lowering U.S. credit one level to AA+ won’t hurt Exxon Mobil’s AAA rating, the highest available, Standard & Poor’s said today in a statement, citing the company’s global and diverse business lines and its significant financial strength.
To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net
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