As commodity prices continued to tumble last week, the benchmarks ended lower, with the S&P 500 posting its biggest weekly decline since August. Relentless decline in oil prices weighed on the broader markets. U.S. crude oil prices stayed near their seven-year low on fears of continued supply glut. And mild weather intensified the downward pressure on oil prices.

Meanwhile, China’s discouraging trade data reignited fears of a global slowdown, which intensified the downward pressure on material stocks. Separately, an abrupt closure of a high-profile junk bond mutual fund also added to the bearish sentiment.

However, a strong November jobs report gave indications that the Federal Reserve is widely expected to hike benchmark interest rates for the first time in almost a decade during its two-day policy meeting on Dec 15–16. Fed officials expect the employment and inflation rates to touch the desired level reflecting a healthy U.S. economy.

Given the Fed’s confidence in the fundamental strength of the economy, it is expected that the equity market will move north in the near term. Quarterly earnings reports of a large number of companies have also been encouraging. Further, benchmarks posted modest gains on Monday, following a rebound in U.S. crude oil price. Hence, it will be prudent to invest in growth stocks which should get a lift once the broader market recognizes their full potential.

Let’s now look into the factors that dented the markets recently:

Crude Oil Prices Decline

Crude oil prices spiraled down last week after the International Energy Administration said that abundant supply of oil will persist till next year even though demand for oil will continue to decline. Additionally, the Organization of the Petroleum Countries increased its oil production in November to its highest level since 2012.

The increase in output levels was mainly driven by an increase in production by Iraq. Decline in heating-oil price due to a big weekly rise in U.S. distillate supplies also had a negative impact on global oil prices.