U.S. Stocks Move To The Downside Following Troubling Data

wallstreet aug24 01mar23 lt

After initially showing a lack of direction, stocks have moved mostly lower over the course of morning trading on Wednesday. With the downward move, the Dow has fallen to its lowest intraday level in well over three months.

Currently, the major averages are off their lows of the session but still in the red. The Dow is down 16.54 points or 0.1 percent at 32,640.16, the Nasdaq is down 63.72 points or 0.6 percent at 11,391.82 and the S&P 500 is down 15.70 points or 0.4 percent at 3,954.45.

Stocks moved to the downside following the release of a report from the Institute for Supply Management on U.S. manufacturing activity in the month of February.

While the ISM said its manufacturing PMI inched up to 47.7 in February from 47.4 in January, a reading below 50 still indicates a contraction. Economists had expected the index to edge up to 48.0.

The report also showed the prices index jumped to 51.3 in February from 44.5 in January, indicating raw materials prices increased after decreasing for four consecutive months.

"Overall, there is little sign that the recent improvements in manufacturing activity in other economies, particularly China, is being reflected in the U.S.," said Andrew Hunter, Deputy Chief U.S. Economist at Capital Economics. "The ISM index is also still loosely consistent, on past form, with negative GDP growth."

The notable rebound by the prices index may have added to recent concerns about inflation and the outlook for interest rates.

Treasury yields jumped following the release of the report, with the ten-year yield reaching its highest levels in over three months.

Interest rate-sensitive utilities and commercial real estate stocks are seeing notable weakness, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index down by 1.5 percent and 1.2 percent, respectively.

Considerable weakness has also emerged among retail stocks, as reflected by the 1.4 percent drop by the Dow Jones U.S. Retail Index.

Home improvement retailer Lowe's (LOW) is posting a steep loss after reporting fourth quarter sales that missed analyst estimates.

On the other hand, gold stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2.7 percent.

Steel and energy stocks are also seeing significant strength in morning trading, helping to limit the downside for the broader markets.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index soared by 4.2 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has advanced by 0.8 percent, the French CAC 40 Index is up by 0.1 percent and the German DAX Index is just above the unchanged line.

In the bond market, treasuries have pulled back sharply after moving slightly higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.2 basis points at 3.998 percent.

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