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Major Averages Posting Steep Losses In Mid-Day Trading - U.S. Commentary


After coming under pressure early in the session, stocks have seen some further downside over the course of the trading day on Friday. The major averages have slid firmly into negative territory after ending the previous session mixed.

Currently, the major averages are just off their lows of the session. The Dow is down 421.52 points or 1.7 percent at 24,526.15, the Nasdaq is down 144.86 points or 2 percent at 7,043.40 and the S&P 500 is down 43.07 points or 1.6 percent at 2,652.88.

The weakness on Wall Street comes after the Labor Department's closely watched monthly jobs report showed U.S. employment increased by much less than expected in the month of November.

The Labor Department said non-farm payroll employment rose by 155,000 jobs in November after surging up by a downwardly revised 237,000 jobs in October.

Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since hitting 3.5 percent in December of 1969.

Average hourly employee earnings rose by $0.06 to $27.35 in November, reflecting a 3.1 percent increase compared to the same month a year ago. The annual rate of growth was unchanged from October.

"The slightly more modest 155,000 gain in payroll employment in November may not go down well in markets given the heightened nervousness in recent months," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

"But this is still a solid gain that suggests economic growth is gradually slowing back towards its potential pace," he added. "There is nothing here to suggest the economy is suffering a more sudden downturn."

Lingering skepticism about a U.S.-China trade agreement is also weighing on the markets even though President Donald Trump tweeted, "China talks are going very well!"

Sector News

Computer hardware stocks have shown a substantial move to the downside over the course of the session, dragging the NYSE Arca Computer Hardware Index down by 3.2 percent. The index has fallen to its lowest intraday level in a month.

Tech giant IBM Corp. (IBM) is posting a notable loss after agreeing to sell some of its software products to India-based HCL Technologies for $1.8 billion.

Significant weakness has also emerged among transportation stocks, as reflected by the 2.6 percent slump by the Dow Jones Transpiration Average.

Software, semiconductor, biotechnology, and retail stocks are also seeing considerable weakness, while energy stocks continue to buck the downtrend amid a sharp increase by the price of crude oil.

Crude for January delivery is spiking $2.36 to $53.85 a barrel after OPEC and non-OPEC countries agreed to cut production by a combined 1.2 million barrels a day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.8 percent, while Australia's S&P/ASX 200 Index rose by 0.4 percent.

European stocks also moved mostly higher on the day, although the German DAX Index edged down by 0.2 percent. While the French CAC 40 Index advanced by 0.7 percent, the U.K.'s FTSE 100 Index jumped by 1.1 percent.

In the bond market, treasuries have climbed back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.883 percent.

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