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Stocks Come Under Pressure Amid Worries About The Fed - U.S. Commentary


Stocks have shown a notable move to the downside in early trading on Friday amid lingering concerns about the outlook for the Federal Reserve's asset purchase program. The major averages have slid firmly into negative territory, adding to the modest losses posted in the previous session.

The major averages are currently posting notable losses, near their lows for the young session. The Dow is down 63.43 points or 0.4 percent at 15,231.07, the Nasdaq is down 20.31 points or 0.6 percent at 3,439.11 and the S&P 500 is down 10.45 points or 0.6 percent at 1,640.06.

The early weakness on Wall Street comes following the release of a report from the Commerce Department showing a bigger than expected rebound in durable goods orders in the month of April.

While the report suggests an impending recovery in manufacturing activity following a recent pullback, the data has added to worries that the Fed will taper its stimulus in the near future.

The report said durable goods orders surged up by 3.3 percent in April after tumbling by a revised 5.9 percent in March. Economists had expected orders to climb 1.1 percent compared to the 5.7 percent drop that had been reported for the previous month.

Excluding a rebound in orders for transportation equipment, durable goods orders rose by 1.3 percent in April compared to a 1.7 percent drop in March.

Recent comments from Fed officials have suggested that upbeat economic data may lead the central bank to taper its asset purchase program sooner than previously anticipated.

In Congressional testimony on Wednesday, Fed Chairman Ben Bernanke acknowledged that upbeat economic data could lead the central bank to taper its asset purchase program in the next few meetings.

Additionally, the minutes of the latest Fed meeting said a number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting.

Health insurance stocks are seeing considerable weakness in early trading, dragging the Morgan Stanley Healthcare Payor Index down by 1.7 percent. Centene (CNC) and Health Net (HNT) are turning in two of the sector's worst performances.

Software, housing, and natural gas stocks are also seeing early weakness, while most of the other major sectors have shown more modest moves to the downside.

Nonetheless, trading activity has remained somewhat subdued, with some traders getting a head start on the Memorial Day weekend.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday following Thursday's sell-off. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has edged down by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both down by 0.6 percent.

In the bond market, treasuries have moved modestly higher after ending the previous session nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.8 basis points at 2.005 percent.

by RTTNews Staff Writer

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