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Stocks Pull Back Sharply After Seeing Early Strength - U.S. Commentary

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Stocks have shown a significant downturn over the course of the trading session on Wednesday after failing to sustain an early move to the upside. The major averages have pulled back well off their best levels of the day and into negative territory.

In recent trading, the major averages hit new lows for the session. The Dow is down 21.87 points or 0.1 percent at 24,382.61, the Nasdaq is down 46.55 points or 0.7 percent at 6,973.80 and the S&P 500 is down 13.62 points or 0.5 percent at 2,619.28.

The pullback by stocks may be partly due to lingering concerns about the global economic outlook as well as worries about the impact of the ongoing U.S. government shutdown.

In an interview with CNN, a top economic adviser to President Donald Trump acknowledged the shutdown could lead to a lack of economic growth in the first quarter.

White House Council of Economic Advisers Chairman Kevin Hassett conceded the U.S. could see zero growth if the shutdown continues for the whole quarter.

"It is true that if we get a typically weak first quarter and extended shutdown that we could end up with a number that is very low," or "very close to zero," Hassett said.

However, Hassett predicted the second quarter growth would subsequently be humongous assuming the government reopened.

The early strength on Wall Street come as traders reacted positively to upbeat earnings news from several big-name companies.

Consumer products giant Procter & Gamble (PG) continue to significant strength after reporting better than expected fiscal second quarter results.

Shares of United Technologies (UTX) also remain notably higher after the industrial conglomerate reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Tech giant IBM Corp. (IBM) is posting a standout gain after reporting fourth quarter results that beat estimates and providing upbeat guidance for 2019.

Sector News

Oil service stocks have moved sharply lower over the course of the trading session, dragging the Philadelphia Oil Service Index down by 2.4 percent. The index continues to give back ground after reaching its best closing level in over a month last Friday.

The weakness among oil service stocks comes amid a decrease by the price of crude oil, with crude for March delivery falling $0.51 to $52.50 a barrel.

Significant weakness has also emerged among transportation stocks, as reflected by the 1.6 percent drop by the Dow Jones Transportation Average.

Natural gas, biotechnology, and chemical stocks have also come under pressure over the course of the session, contributing to the pullback by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance during trading on Wednesday. Japan's Nikkei 225 Index edged down by 0.2 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets all moved to the downside over the course of the session. While the U.K.'s FTSE 100 Index slumped by 0.9 percent, the German DAX Index and the French CAC 40 Index both dipped by 0.2 percent.

In the bond market, treasuries have climbed well off their worst levels but continue to see modest weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up 1.1 basis points at 2.741 percent.

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