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Dow, S&P 500 Join Nasdaq In Negative Territory In Late-Day Sell-Off

wallstreet oct17 11aug20 lt

After turning in a mixed performance for most of the session, the major U.S. stock averages came under pressure late in the trading day on Tuesday. The Dow and the S&P 500 pulled back into negative territory, joining the tech-heavy Nasdaq, which posted a particularly steep loss.

The major averages ended the session just off their worst levels of the day. While the Nasdaq tumbled 185.53 points or 1.7 percent to 10,782.83, the Dow fell 104.53 points or 0.4 percent to 27,686.91 and the S&P 500 slid 26.78 points or 0.8 percent to 3,333.69.

The late-day sell-off on Wall Street came as traders continued to cycle out of big-name tech stocks, with the Nasdaq extending the pullback seen over the two previous session.

The Nasdaq pulled back further off the record closing high set last Thursday amid steep drops by tech giants such as Netflix (NFLX), Apple (AAPL), and Facebook (FB).

Before the downturn, the Dow and the S&P 500 were moving higher for the eighth consecutive session and reached their best intraday levels in over five months. The S&P 500 climbed within striking distance of its record high before turning lower.

The mixed performance seen earlier in the day came as the weakness among tech stocks was offset by strength among airlines and cruse operators.

Companies that have been hurt the most by the coronavirus pandemic benefited from news that Russia has approved a vaccine, with Russian President Vladimir Putin claiming it works "quite effectively."

"It forms a stable immunity and, I repeat, has passed all the necessary checks," Putin said at a meeting with members of the government, according to RIA Novosti.

The speed of the development of the vaccine has raised questions about its safety, although the news still generated optimism the coronavirus pandemic can be contained in the relatively near future.

In U.S. economic news, the Labor Department released a report showing producer prices climbed by more than expected in the month of July.

The Labor Department said its producer price index for final demand rose by 0.6 percent in July after dipping by 0.2 percent in June.

The rebound in producer prices reflected the largest increase since October of 2018 and exceeded economist estimates for an uptick of 0.3 percent.

Excluding food and energy prices, core producer prices still climbed by 0.5 percent in July after falling by 0.3 percent in June. Economists had expected core prices to inch up by 0.1 percent.

Sector News

Gold stocks turned in some of the market's worst performances on the day, resulting in a 7.4 percent nosedive by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks came amid a steep drop by the price of the precious metal, with gold for December delivery plummeting $93.40 to $1,946.30 an ounce.

Considerable weakness also emerged among utilities stocks, as reflected by the 2.3 percent slump by the Dow Jones Utilities Average. The average continued to give back ground after ending last Friday's trading at a two-month closing high.

Natural gas, software and commercial real estate stocks also came under pressure over the course of the session, while significant strength remained visible among airline and financial stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, although China's Shanghai Composite Index bucked the uptrend and slumped by 1.2 percent. Japan's Nikkei 225 Index jumped by 1.9 percent, while Hong Kong's Hang Seng Index surged up by 2.1 percent.

The major European markets also showed strong moves to the upside on the day. While the French CAC 40 Index soared by 2.4 percent, the German DAX Index spiked by 2 percent and the U.K.'s FTSE 100 Index shot up by 1.7 percent.

In the bond market, treasuries moved significantly lower over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.4 basis points to 0.658 percent.

Looking Ahead

A report on consumer price inflation may attract some attention on Wednesday, while traders are also likely to keep an eye on the latest developments in Washington.

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