Dow Jones drops into red for year
The Dow Jones industrial average has slipped into the red for the year as US stocks extended their slump.
Airlines were among the biggest losers amid concern that capacity growth in the industry may curb profitability.
JetBlue Airways, American Airlines and Delta Air Lines were among the carriers that saw a decline.
Stocks have sagged in the past two weeks as investors try to assess if US Federal Reserve policymakers will raise their benchmark interest rate later this year for the first time since the recession.
A stronger-than-forecast jobs report on Friday suggested that the American economy is recovering from its winter slump.
The Fed has kept its benchmark interest rate unchanged at close to zero for more than six years to help support lending and boost the economy. Those low rates have also boosted the stock market in that time, pushing it to record levels.
“The market is suggesting that if the data continue at this pace, the Fed will be more inclined to raise rates in September, rather than waiting,” said Quincy Krosby, a market strategist at Prudential Financial.
The Standard & Poor’s 500 index dropped 13.55 points, or 0.7%, to 2,079.28. The Dow fell 82.91 points, or 0.5%, to 17,766.55, giving it a loss of 0.3% for 2015.
The Nasdaq composite declined 46.83 points, or 0.9%, to 5,021.63.
On Monday, airline stocks were among the biggest decliners as industry executives met in Miami for the International Air Transportation group’s annual general meeting.
American Airlines CEO Doug Parker told Reuters at the meeting Sunday that he was worried that growth in airline capacity could depress profits.
Analysts at Raymond James cut their earnings forecasts for American Airlines, Delta Air Lines and United Continental.
American Airlines was among the leading decliners in the S&P 500, dropping 1.86 dollars (£1.21), or 4.5%, to 39.86 dollars (£26.09). Delta Air Lines, United, Southwest Airlines and JetBlue also fell.
The drop for airlines extended a theme of weakness for the transport sector.
The Dow Jones Transportation average is down almost 9 percent this year, a slump that is giving a potentially worrying signal about the economy even as hiring picks up. A drop in transport companies could mean that fewer goods are being transported by boat, plane or rail, suggesting the demand remains weak six years after the end of the recession.
“You do want to see transport stocks gaining,” said Prudential’s Krosby. “It would lend confirmation (to expectations) that the economy is gaining that crucial momentum that we have been waiting for.”
Some analysts forecast that the current weakness in stocks will prove transitory and stocks will eventually continue to move higher. This is because corporate profits are still strong and interest rates will still be low enough to boost growth.
“Even when the Fed begins to raise rates later this year, we will be going from zero to something that is slightly above zero,” said Michael Arone, Chief Investment Strategist for State Street Global Advisors.
In energy trading, the price of oil fell as import data suggested a slowdown in Chinese trade, which could lead to weaker global demand for diesel, gasoline and other fuels.
Benchmark US crude fell 99 cents to close at $58.14 (€51.50) a barrel in New York. Brent crude, a benchmark for international oil used by many US refineries, fell 62 cents to close at $62.69 (€55.53) in London.
