Plus   Neg

U.S. Stocks Remain Firmly Negative After Early Sell-Off

wallstreet nov01 08oct19 lt

After coming under pressure early in the session, stocks continue to see substantial weakness in mid-day trading on Tuesday amid waning optimism about upcoming U.S.-China trade talks. The major averages remain firmly in negative territory, adding to the losses posted in the previous session.

Currently, the major averages are off their lows of the session but stuck in the red. The Dow is down 283.87 points or 1.1 percent at 26,194.15, the Nasdaq is down 99.59 points or 1.3 percent at 7,856.71 and the S&P 500 is down 36.60 points or 1.3 percent at 2,902.19.

The sell-off on Wall Street comes after a report from the South China Morning Post said China is subtly toning down expectations ahead of this week's high-level negotiations.

The SCMP said Chinese Vice Premier Liu He is leading China's delegation to Washington but will not carry the title of "special envoy" for President Xi Jinping, an early indication that Liu has not been given any particular instructions from China's leader.

A source briefed on preparations for the trade talks also told the SCMP that the Chinese delegation may cut short their stay in Washington.

News that the U.S. has expanded its trade blacklist to include some of China's top artificial intelligence firms may also cast a shadow over the talks along with a Bloomberg report the White House is discussing blocking government pension funds from investing in China.

Meanwhile, traders have largely shrugged off a Labor Department report showing an unexpected decrease in U.S. producer prices in the month of September.

The Labor Department said its producer price index for final demand fell by 0.3 percent in September after inching up by 0.1 percent in August. The drop surprised economists, who had expected another 0.1 percent uptick.

Excluding food and energy prices, core producer prices also slid by 0.3 percent in September after climbing by 0.3 percent in August. Economists had expected core prices to rise by 0.2 percent.

The tame inflation data may clear the way for the Federal Reserve to continue cutting interest rates amid signs of slowing economic growth.

Sector News

Semiconductor stocks continue to turn in some of the market's worst performances in mid-day trading, with the Philadelphia Semiconductor Index plunging by 2.6 percent.

Chipmaker Ambarella (AMBA) is posting a particularly steep loss after one of its Chinese customers was blacklisted by the U.S. government.

Significant weakness also remains visible among biotechnology stocks, as reflected by the 2.3 percent slump by the NYSE Arca Biotechnology Index.

Banking, natural gas and computer hardware are also seeing considerable weakness, while gold stocks are among the few groups bucking the downtrend amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1 percent, while China's Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index has slid by 0.8 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.1 percent and 1.2 percent, respectively.

In the bond market, treasuries are rebounding following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.1 basis points at 1.522 percent.

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