Stocks are seeing modest weakness in early trading on Tuesday, adding to the steep losses posted in the previous session. The major averages have dipped below the unchanged line, although selling pressure has remained relatively subdued.
The major averages have seen some further downside in the past few minutes, hitting new lows for the young session. The Dow is down 49.57 points or 0.4 percent at 12,671.89, the Nasdaq is down 7.49 points or 0.3 percent at 2,882.66 and the S&P 500 is down 4.18 points or 0.3 percent at 1,346.34.
The early weakness on Wall Street reflects continued concerns about the financial situation in Europe, which helped to drag stocks sharply at the start of trading on Monday.
Adding to the worries about Europe, credit ratings agency Moody's revised the outlooks on the Aaa sovereign ratings of Germany, the Netherlands and Luxembourg to negative from stable.
Moody's cited the rising uncertainty regarding the outcome of the euro area debt crisis, which stems in part from the increased likelihood of Greece's exit from the euro area.
In other troubling news out of Europe, flash estimates released by Markit Economics showed that its manufacturing index for the eurozone slid 1 point to 44.1 in July. On the other hand, the services index rose 0.5 points to 47.6.
The composite index for both industries remained below 50 for the sixth consecutive month, holding unchanged at 46.4, in line with expectations.
Helping to limit the downside for the markets, a separate report from Markit Economics showed that its index of Chinese manufacturing activity came in at 49.5 in July, up from 48.2 in June.
While the index remained below the key 50 level, it suggested the slowest contraction in manufacturing activity in five months. The modest improvement came about due to a rebound in output.
Traders are also digesting the latest batch of earnings news, including quarterly results from well known companies such as AT&T (T), DuPont (DD), and UPS (UPS).
Networking stocks have shown a notable move to the downside, dragging the NYSE Arca Networking Index down by 1.7 percent. Cisco (CSCO) is helping to lead the way lower after announcing plans to cut about 1,300 jobs or about 2 percent of its global workforce.
Defense and trucking stocks are also seeing notable weakness, while most of the major sectors are showing only moves. Moderate strength has emerged among railroad and banking stocks.
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 0.2 percent, China's Shanghai Composite Index crept up by 0.2 percent.
The major European markets have also turned mixed over the course of the trading day. The U.K.'s FTSE 100 Index is down by 0.1 percent, while the French CAC 40 Index and the German DAX Index have risen by 0.2 percent and 0.3 percent, respectively.
In the bond market, treasuries have moved modestly lower, pulling back off yesterday's record highs. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.8 basis points at 1.453 percent.
by RTT Staff Writer
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