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Sharp Pullback By Banking Stocks Weighing On Wall Street

wallstreet sept18 26jun20 lt

Following the rally seen going into the close of the previous session, stocks have pulled back sharply during trading on Friday. The major averages have all shown significant moves to the downside.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 573.67 points or 2.2 percent at 25,171.93, the Nasdaq is down 207.30 points or 2.1 percent at 9,809.70 and the S&P 500 is down 56.22 points or 1.8 percent at 3,027.54.

Banking stocks have helped to lead the way lower after showing a strong move to the upside in the previous session. Reflecting the weakness in the sector, the KBW Bank Index has plunged by 5.3 percent.

The pullback by banking stocks came after the Federal Reserve said the nation's biggest banks are healthy but could suffer up to $700 billion in losses on soured loans if the economy languishes.

The Fed ordered certain banks to cap dividends and suspend share buybacks to conserve funds.

Banking stocks rallied on Thursday amid news U.S. regulators plan to ease banking regulations, including allowing banks to more easily make investments in riskier funds such as venture capital funds.

Significant weakness has also emerged among airline stocks, as reflected by the 4.7 nosedive by the NYSE Arca Airline Index.

Energy stocks have also come under pressure amid a decrease by the price of crude oil, while steel, brokerage and telecom stocks have also moved notably lower.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index jumped by 1.1 percent, while Australia's S&P/ASX 200 Index surged up by 1.5 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index has dipped by 0.3 percent, the French CAC 40 Index is up by 0.5 percent and the U.K.'s FTSE 100 Index is up by 0.8 percent.

In the bond market, treasuries have shown a strong move to the upside in morning trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.6 basis points at 0.648 percent.

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