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U.S. Stocks Remain Sharply Lower After Initial Nosedive

wallstreet sept05 24feb20 lt

After moving sharply lower at the open, stocks continue to see substantial weakness in mid-day trading on Monday. The major averages are extending the drop seen over the two previous sessions, with the Nasdaq and the S&P 500 pulling back further off last Wednesday's record closing highs.

In recent trading, the major averages have moved roughly sideways, stuck firmly in negative territory. The Dow is down 912.27 points or 3.2 percent at 28,080.14, the Nasdaq is down 339.71 points or 3.6 percent at 9,236.88 and the S&P 500 is down 101.60 points or 0.3 percent at 3,236.15.

The sell-off on Wall Street reflects concerns about the spread of the coronavirus amid a spike in the number of confirmed cases outside of China.

South Korea announced a total of 231 new coronavirus cases earlier today, leading the government to raise the coronavirus alert to its highest level.

A jump in confirmed coronavirus cases in Italy as well as new cases in Middle East countries like Iraq and Afghanistan has raised concerns about the outbreak escalating into a pandemic.

Traders shrugged off concerns about the coronavirus earlier this month, helping propel stocks to new record highs amid optimism the outbreak would quickly be contained.

However, the continued spread of the virus along with several companies warning about the financial impact seems to have traders reassessing their positions.

Energy stocks continue to turn in some of the market's worst performances in mid-day trading, moving sharply lower along with the price of crude oil. Crude for April delivery is plunging $2.61 to $50.77 a barrel amid concerns about the outlook for demand.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 6.3 percent, the NYSE Arca Oil Index is down by 4.9 percent and the NYSE Arca Natural Gas Index is down by 4.2 percent.

Substantial weakness also remains visible among steel stocks, as reflected by the 4.8 percent nosedive by the NYSE Arca Steel Index. The index has fallen to its lowest intraday level in over four months.

Transportation, computer hardware and semiconductor stocks are also seeing significant weakness amid a broad based sell-off on Wall Street.

Meanwhile, gold stocks are among the few groups bucking the downtrend, with the NYSE Arca Gold Bugs Index spiking by 2.6 percent to its best intraday level in well over three years.

The rally by gold stocks comes amid a jump by the price of the precious metal, as gold for April delivery is soaring $26.60 to $1,675.40 an ounce.

In overseas trading, stock markets across the Asia-Pacific region moved significantly lower during trading on Monday. Hong Kong's Hang Seng Index tumbled by 1.8 percent, while South Korea's Kospi plummeted by 3.9 percent.

The major European markets also showed substantial moves to the downside on the day. While the U.K.'s FTSE 100 Index showed a 3.3 percent nosedive, the French CAC 40 Index and the German DAX Index both plunged by 4 percent.

In the bond market, treasuries have moved sharply higher, reflecting their appeal as a safe haven. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 10.2 basis points at 1.369 percent.

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