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Stocks Extending Early Sell-Off In Mid-Day Trading - U.S. Commentary

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After coming under pressure early in the session, stocks have seen further downside over the course of the trading session on Friday. The Nasdaq and the S&P 500 are pulling back sharply after ending the previous session at their best closing levels in well over five months.

In recent trading, the major averages have fallen to new lows for the session. The Dow is down 375.83 points or 1.5 percent at 25,586.68, the Nasdaq is down 155.41 points or 2 percent at 7,683.55 and the S&P 500 is down 44.49 points or 1.6 percent at 2,810.39.

The sell-off on Wall Street partly reflects profit taking, with traders cashing in on recent gains after yesterday's strong upward move.

Lingering uncertainty about trade talks between the U.S. and China is also weighing on the markets ahead of another round of high-level negotiations next week.

Meanwhile, traders continue to digest the Federal Reserve's dovish monetary policy announcement earlier in the week.

The Fed's decision to move away from plans to continue raising interest rates this year has been described by some analysts as an effort to keep the stock markets afloat amid an expected contraction in first quarter earnings.

The central bank has also been accused of bending to pressure from President Donald Trump, who has claimed U.S. economic growth would be even stronger if the Fed had not raised rates last year.

Chairman Jerome Powell has continually touted the Fed's independence, however, suggesting the dovish tone could also reflect legitimate concerns about the economic outlook.

Adding to the concerns about the outlook for the economy, the yield on the benchmark ten-year note has fallen below the yield on the three-month bond, which is seen by many as a reliable harbinger of a recession.

Meanwhile, traders have largely shrugged off a report from the National Association of Realtors showing a substantial rebound in existing home sales in the month of February.

NAR said existing home sales soared by 11.8 percent to an annual rate of 5.51 million in February after slumping by 1.4 percent to a revised rate of 4.93 million in January.

Economists had expected existing home sales to surge up by 3.2 percent to a rate of 5.10 million from the 4.94 million originally reported for the previous month.

Sector News

Oil service stocks have moved sharply lower over the course of the trading session, resulting in a 5.5 percent nosedive by the Philadelphia Oil Service Index. The index is pulling back well off its best closing level in well over a month.

The sell-off by oil service stocks comes amid a steep drop by the price of crude oil, with crude for May delivery tumbling $1.39 to $58.59 a barrel.

The notable decrease by the price of crude oil is contributing to weakness throughout the energy sector, as the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index are also plunging by 3.6 percent and 3.3 percent, respectively.

Substantial weakness also remains visible among financial stocks, which are extending the sell-off seen since the Fed announcement.

While the KBW Bank Index has plummeted by 4.1 percent, the NYSE Arca Broker/Dealer Index has slumped by 3.7 percent.

Steel, chemical, biotechnology and computer hardware stocks are also seeing considerable weakness, while utilities stocks are among the few groups bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved slightly higher during trading on Friday. Japan's Nikkei 225 Index, China's Shanghai Composite Index and Hong Kong's Hang Seng Index all inched up by 0.1 percent.

Meanwhile, the major European markets have shown significant moves to the downside on the day. While the German DAX Index has slumped 1.4 percent, the French CAC 40 Index is down by 1.9 percent and the U.K.'s FTSE 100 Index is down by 2.1 percent.

In the bond market, treasuries have moved notably higher after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.6 basis points at 2.421 percent.

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