Stocks have moved sharply lower over the course of the trading day on Wednesday, offsetting the gains posted earlier in the week. Lingering concerns about the financial situation Europe are weighing on the markets once again.
The major averages are currently posting steep losses, near their lows for the session. The Dow is down 166.73 points or 1.3 percent at 12,336.08, the Nasdaq is down 37.89 points or 1.3 percent at 2,801.19 and the S&P 500 is down 17.20 points or 1.3 percent at 1,299.43.
The pullback by stocks comes as traders are keeping a close eye on the latest developments in Europe, with traders worried about the impact of Greece leaving the eurozone amid a meeting of European leaders in Brussels.
The European Union summit is expected to focus on ways to boost the struggling European economy as well as the ongoing uncertainty about Greece following the debt-plagued nation's failure to form a government.
Noting yesterday's reaction to remarks by former Greek Prime Minister Lucas Papademos, Peter Boockvar, managing director at Miller Tabak, said, "The markets are on edge and sensitive to every possible out of control scenario coming out of Europe."
The worries about Europe have overshadowed a Commerce Department report showing a bigger than expected increase in U.S. new home sales in the month of April.
The report showed that new home sales rose 3.3 percent to an annual rate of 343,000 in April from the revised March rate of 332,000. Economists had expected new home sales to climb to 335,000 from the 328,000 originally reported for the previous month.
Disappointing earnings news from Dell (DELL) is also contributing to the weakness on Wall Street, with the PC giant tumbling by 17.5 percent after reporting weaker than expected first quarter results and providing disappointing second quarter revenue guidance.
Chip maker Analog Devices (ADI) is also trading lower after reporting lower second quarter earnings and forecasting third quarter earnings toward the low end of analyst estimates.
Meanwhile, shares of Take-Two (TTWO) are moving notably higher after the video game maker reported a wider than expected fourth quarter loss but on stronger than expected revenues. The company also suggested that it is positioned for profitability this year.
With Dell leading the way lower, computer hardware stocks are seeing substantial weakness in mid-day trading. Reflecting the weakness in the computer hardware sector, the NYSE Arca Computer Hardware Index has plunged 4 percent to a four-month intraday low.
Hewlett-Packard (HPQ) and Logitech (LOGI) are posting steep losses along with Dell, falling by 4.1 percent and 3.7 percent, respectively.
Steel stocks have also moved sharply lower on the day amid concerns about the outlook for demand. The NYSE Arca Steel Index is down by 3.1 percent amid notable losses by Mechel (MTL), U.S. Steel (X), and ArcelorMittal (MT).
Considerable weakness has also emerged among brokerage stocks, as reflected by the 2.2 percent loss being posted by the NYSE Arca Broker/Dealer Index. Biotechnology, software, and natural gas stocks are also under pressure amid broad based weakness.
In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2 percent, while Hong Kong's Hang Seng Index ended the day down by 1.3 percent.
The major European markets also saw significant weakness on the day. While the French CAC 40 Index plummeted 2.6 percent, the U.K.'s FTSE 100 Index and the German DAX Index dove 2.5 percent and 2.3 percent, respectively.
In the bond market, treasuries have shown a strong move back to upside after giving back some ground in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 7.4 basis points at 1.719 percent.
by RTT Staff Writer
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