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U.S. Stocks Seeing Further Downside In Afternoon Trading

wallstreet1 061318 06dec22 lt

After ending the previous session sharply lower, stocks have shown another substantial move to the downside during trading on Tuesday. The major averages moved notably lower in early trading and have seen further downside over the course of the session.

In recent trading, the major averages have fallen to new lows for the session. The Dow is down 437.68 points or 1.3 percent at 33,509.42, the Nasdaq is down 227.56 points or 2.0 percent at 11,012.38 and the S&P 500 is down 66.65 points or 1.7 percent at 3,932.19.

The extended sell-off on Wall Street reflects lingering concerns about the outlook for interest rates ahead of next week's Federal Reserve meeting.

While the Fed is widely expected to slow the pace of interest rate hikes next week, recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings.

Traders are likely to pay close attention to the Fed's accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

The recent selling on Wall Street partly reflects worries the Fed will be need to push the economy into a prolonged recession in order to bring inflation down close to its 2 percent target.

In U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened in the month of October.

The report said the trade deficit widened to $78.2 billion in October from a revised $74.1 billion in September. Economists had expected the trade deficit to increase to $79.1 billion from the $73.3 billion originally reported for the previous month.

The wider trade deficit came as the value of exports slid by 0.7 percent to $256.6 billion, while the value of imports climbed by 0.6 percent to $334.8 billion.

Sector News

Oil stocks have moved sharply lower over the course of the session, with another steep drop by the price of crude oil weighing the sector.

With crude for January delivery plunging $3.27 to $73.66 a barrel, the NYSE Arca Oil Index has tumbled by 2.7 percent to its lowest intraday level in well over a month.

Substantial weakness has also emerged among biotechnology stocks, dragging the NYSE Arca Biotechnology Index down by 2.4 percent. The index is pulling back further off the eleven-month closing high set last Friday.

Banking stocks also continue to see significant weakness in afternoon trading, resulting in a 2.4 percent slump by the KBW Bank Index.

Networking, semiconductor and retail stocks have also shown notable moves to the downside, moving lower along with most of the other major sectors.

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 crept up by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index slid by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries are regaining ground following the sharp pullback 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 3.8 basis points at 3.561 percent.

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