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Stocks Showing Notable Move To The Downside - U.S. Commentary

After showing a lack of direction in early trading, stocks have shown a notable move to the downside over the course of the trading day on Tuesday. Lingering concerns about the global economic outlook are weighing on the markets.

The major averages have accelerated to the downside in recent trading, falling to new lows for the session. The Dow is down 130.29 points or 1 percent at 12,799.30, the Nasdaq is down 34.55 points or 1.1 percent at 3,012.53 and the S&P 500 is down 16.08 points or 1.2 percent at 1,366.12.

The weakness that has emerged on Wall Street comes as traders continue to cash in on the recent strength in the markets following last Friday's disappointing jobs report.

A sharply lower close by the major European markets also contributed to the pullback by U.S. stocks, as traders worried about the global economic impact of a recession in Europe.

Additionally, uncertainty about the upcoming earnings season has also generated some selling pressure, with aluminum giant Alcoa (AA) scheduled to release its first quarter results after the close of trading.

Alcoa is typically the first Dow component to report its quarterly results, and the release of its results is seen as the unofficial start of the earnings season.

Meanwhile, traders have largely shrugged off a Commerce Department report showing a bigger than expected increase in wholesale inventories in the month of February.

The report showed that wholesale inventories increased by 0.9 percent in February compared to economist estimates for an increase of about 0.6 percent.

Among individual stocks, shares of ViroPharma (VPHM) have come under pressure on news of the FDA's approval of generic versions of the company's drug Vancocin. ViroPharma is down by 18.6 percent after hitting a four-month low.

Sony (SNE) is also posting a notable loss after forecasting a wider than expected loss of $6.4 billion for the fiscal year ended March 31st. Shares of Sony are down by 9.9 percent.

Meanwhile, Supervalu (SVU) is up by 9 percent after the supermarket operator reported better than expected adjusted fourth quarter earnings and forecast full-year earnings above analyst estimates.

Sector News

Oil service stocks have shown a significant downward move over the course of the trading day, dragging the Philadelphia Oil Service Index down by 2.6 percent. With the loss, the index has fallen to its lowest intraday level in almost three months.

A notable decrease by the price of crude oil is contributing to the weakness in the oil service sector, with crude for May delivery sliding $1.18 to $101.28 a barrel.

Significant weakness also remains visible among health insurance stocks, which are adding to yesterday's steep losses. The Morgan Stanley Healthcare Payor Index is down by 2.3 percent after ending Monday's trading down by 7.2 percent.

Considerable weakness has also emerged among transportation stocks, as reflected by the 2.2 percent loss being posted by the Dow Jones Transportation Average. Overseas Shipholding Group (OSG), Delta Air Lines (DAL), and Con-Way (CNW) are turning in some of the sector's worst performances.

Most of the other major sectors have also moved to the downside on the day, with steel, electronic storage, and housing stocks posting notable losses in mid-day trading.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. While Japan's Nikkei 225 Index edged down by 0.1 percent, China's Shanghai Composite Index advanced by 0.9 percent.

Meanwhile, the major European markets all showed notable moves the downside over the course of the session. The French CAC 40 Index fell by 3.1 percent, the German DAX Index dropped by 2.5 percent, and the U.K.'s FTSE 100 Index slid by 2.2 percent.

In the bond market, treasuries have moved higher on the day, extending a recent upward move. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.2 basis points at 1.995 percent.

by RTT Staff Writer

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