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U.S. Stocks Move To The Downside On Economic Worries

wallstreet sept18 18oct19 lt

After ending the previous session modestly higher, stocks have moved to the downside over the course of morning trading on Friday. The major averages have all slid into negative territory, although selling pressure has remained somewhat subdued.

Currently, the major averages are just off their lows of the session. The Dow is down 99.71 points or 0.4 percent at 26,926.17, the Nasdaq is down 50.12 points or 0.6 percent at 8,106.73 and the S&P 500 is down 8.44 points or 0.3 percent at 2,989.51.

The weakness that has emerged on Wall Street may partly reflect concerns about the global economic outlook following disappointing Chinese data.

Data from the National Bureau of Statistics showed China's economy grew at the slowest rate in nearly three decades in the third quarter, raising pressure on policymakers to roll out more stimulus.

China's GDP grew 6 percent year-on-year in the third quarter after rising 6.2 percent in the second quarter. This was the slowest growth since the early 1990s. Growth was forecast to slow marginally to 6.1 percent.

Stocks saw further downside following the release of a Conference Board report showing an unexpected drop by its reading on leading U.S. economic indicators in the month of September.

The Conference Board said its leading economic index edged down by 0.1 percent in September after dipping by a revised 0.2 percent in August.

Economists had expected the index to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the drop by the index reflected weaknesses in the manufacturing sector and the interest rate spread, which were only partially offset by rising stock prices and a positive contribution from the Leading Credit Index.

"The LEI reflects uncertainty in the outlook and falling business expectations, brought on by the downturn in the industrial sector and trade disputes," said Ozyildirim.

He added, "Looking ahead, the LEI is consistent with an economy that is still growing, albeit more slowly, through the end of the year and into 2020."

Selling pressure has remained somewhat subdued, however, with lingering uncertainty about a possible U.S.-China trade deal and questions about the Brexit deal getting through parliament keep traders on the sidelines.

Software stocks have come under pressure over the course of the morning, dragging the Dow Jones U.S. Software Index down by 1.3 percent.

Tobacco, computer hardware and semiconductor stocks have also moved to the downside, while some strength is visible among oil service stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday, although Japan's Nikkei 225 Index bucked the downtrend and edged up by 0.2 percent. China's Shanghai Composite Index slumped by 1.3 percent and Hong Kong's Hang Seng Index fell by 0.5 percent.

The major European markets have also moved to the downside over the course of the session. While the French CAC 40 Index slid by 0.8 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both down by 0.3 percent.

In the bond market, treasuries continue to show a lack of direction after ending yesterday's trading nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 1.748 percent.

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