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Stocks Remain Firmly Negative After Early Sell-Off - U.S. Commentary

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After coming under pressure early in the session, stocks continue to see notable weakness in mid-day trading on Thursday. The major averages are adding to the losses posted in the previous session.

Currently, the major averages are off their worst levels of the day but still firmly in negative territory. The Dow is down 228.75 points or 0.9 percent at 25,444.71, the Nasdaq is down 51.03 points or 0.7 percent at 7,454.89 and the S&P 500 is down 19.49 points or 0.7 percent at 2,751.96.

The continued weakness on Wall Street comes after the European Central Bank slashed its economic growth forecast, citing lingering, mainly external uncertainties.

The ECB also said it now expects eurozone interest rates to remain at the current level at least till the end of this year.

The eurozone growth outlook for this year was cut to 1.1 percent from 1.7 percent, while the outlook for next year was trimmed to 1.6 percent from 1.7 percent.

The risks surrounding the euro area growth outlook are still tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets, the ECB said.

"While there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year," said ECB President Mario Draghi.

He added, "The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment."

Reflecting the concerns about the economic outlook, the ECB announced steps to preserve favorable bank lending conditions and the smooth transmission of monetary policy.

The ECB said a new series of quarterly targeted longer-term refinancing operations (TLTRO-III) will be launched, starting in September 2019 and ending in March 2021, each with a maturity of two years.

Sector News

Steel stocks continue to see substantial weakness in mid-day trading amid concerns about global demand. Reflecting the weakness in the sector, the NYSE Arca Steel Index has slumped by 1.9 percent.

Considerable weakness also remains visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index down by 1.8 percent and 1.5 percent, respectively.

Oil service stocks have also shown a significant move to the downside, dragging the Philadelphia Oil Service Index down by 1.5 percent.

The weakness among oil service stocks comes despite an increase by the price of crude oil, as crude for April delivery is rising $0.45 to $56.67 a barrel.

Chemical and retail stocks are also seeing notable weakness, while gold stocks have shown a strong move to the upside even though the price of the precious metal is modestly lower.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Thursday. Japan's Nikkei 225 Index dropped by 0.7 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slid by 0.6 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index fell by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries have moved notably higher amid the weakness on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.4 basis points at 2.648 percent.

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