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Major Averages Posting Steep Losses In Mid-Day Trading

wallstreet nov01 25feb20 lt

After turning lower early in the session, stocks have seen some further downside over the course of the trading day on Tuesday. The major averages are extending the sharp drop seen in the previous session, with the Dow and the S&P 500 tumbling to their lowest intraday levels in over two months.

Currently, the major averages are off their worst levels but continue to post steep losses. The Dow is down 358.72 points or 1.3 percent at 27,602.08, the Nasdaq is down 95.64 points or 1 percent at 9,125.64 and the S&P 500 is down 39.07 points or 1.2 percent at 3,186.82.

The initial strength on Wall Street was partly due to bargain hunting, with some traders picking up stocks at reduced levels on the heels of yesterday's steep drop.

The Dow suffered its biggest point and percentage drop in two years on Monday, as traders worried about the impact of the coronavirus outbreak that has spread far beyond China to Europe and the Middle East.

Buying interest waned shortly after the start of trading, however, as fears about the outbreak escalating into a pandemic continued to hang over the markets.

Adding to the worries, MasterCard (MA) and United Airlines (UAL) joined a growing list of companies that have warned about the potential financial impact of the outbreak.

Meanwhile, traders largely shrugged off a report from the Conference Board showing a slight improvement in U.S. consumer confidence in the month of February.

The Conference Board said its consumer confidence index inched up to 130.7 in February from a downwardly revised 130.4 in January. Economists had expected the index to tick up to 132.5 from the 131.6 originally reported for the previous month.

"Consumers' short-term expectations improved, and when coupled with solid employment growth, should be enough to continue to support spending and economic growth in the near term," said Lynn Franco, Director of Economic Indicators at the Conference Board.

Sector News

Energy stocks are helping to lead the markets lower once again, with a continued decrease by the price of crude oil weighing on the sector.

After plunging $1.95 to $51.43 a barrel in the previous session, crude for April delivery is sliding $0.84 to $50.59 a barrel.

Substantial weakness is also visible among networking stocks, as reflected by the 2.7 percent slump by the NYSE Arca Networking Index. With the drop, the index has fallen to its lowest intraday level in a year.

Palo Alto Networks (PANW) is posting a steep loss after reporting weaker than expected fiscal second quarter revenues and providing disappointing guidance.

Chemical, transportation, financial and biotechnology stocks are also seeing significant weakness amid another broad based sell-off.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index plunged by 3.3 percent as trading resumed following a holiday on Monday, while Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets all moved sharply lower over the course of the session. The German DAX Index, the U.K.'s FTSE 100 Index and the French CAC 40 Index all tumbled by 1.9 percent.

In the bond market, treasuries are extending the strong upward move 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 4.3 basis points at 1.334 percent.

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