US stocks reverse gains, falling oil prices a risk to credit markets

US stocks fell on Thursday. The S&P 500 sank 1.5 percent, giving up its gains from Wednesday.

Stocks elsewhere were somewhat more positive. The STOXX Europe 600 jumped 1.2 percent while the MSCI Asia Pacific Index rose 0.7 percent.

However, other markets mostly followed the US stock market down.

Oil fell, West Texas Intermediate oil futures sliding 1.6 percent.

Gold and industrial metals also fell. Gold futures for February delivery plunged 2.5 percent.

As risk assets fell, US Treasuries rose. The 10-year yield dropped seven basis points to 2.23 percent.

Goldman Sachs expects oil prices to fall further, which could in turn further strain credit markets.

"In our view, oil prices remain the epicenter of both credit risk and credit risk sentiment," wrote Charles Himmelberg, chief credit strategist at Goldman Sachs.

While Himmelberg noted that "corporate leverage has risen over the past 4-5 years to levels that have not prevailed since the 1990s", low interest rates mean that servicing the debt is not overly onerous.

Indeed, Goldman economist Zach Pandl said: "For the broader economy, while developments in credit markets bear close monitoring, we do not yet see a case for a more far-reaching credit crunch."