U.S. Stocks Pulling Back Sharply Amid Ongoing Economic Worries
Stocks have moved sharply lower in morning trading on Thursday, giving back ground following the rally seen in the previous session. The major averages have all shown significant moves to the downside, with the tech-heavy Nasdaq leading the pullback.
Currently, the major averages are just off their lows of the session. The Nasdaq is down 257.22 points or 2.4 percent at 10,452.15, the S&P 500 is down 65.66 points or 1.7 percent at 3,812.78 and the Dow is down 451.33 points or 1.4 percent at 32,925.15.
The sharp pullback on Wall Street comes as some traders are cashing in on yesterday’s gains amid ongoing concerns about the outlook for interest rates and the global economy.
Stocks saw further downside following the release of a report from the Conference Board showing a continued slump by its reading on leading U.S. economic indicators in the month of November.
The report said the leading economic index tumbled by 1.0 percent in November after sliding by a revised 0.9 percent in October.
Economists had expected the leading economic index to decrease by 0.5 percent compared to the 0.8 percent drop originally reported for the previous month.
“The US LEI suggests the Federal Reserve’s monetary tightening cycle is curtailing aspects of economic activity, especially housing,” said said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board.
He added, “As a result, we project a US recession is likely to start around the beginning of 2023 and last through mid-year.”
The steep drop by the Nasdaq is partly due to substantial weakness among semiconductor stocks, with the Philadelphia Semiconductor Index plunging by 4.5 percent to its lowest intraday level in well over a month.
Chipmaker Micron Technology (MU) has helped lead the sector after reporting a wider than expected fiscal first quarter loss. The company also announced plans to cut about 10 percent of its workforce.
Software and networking stocks are also seeing significant weakness, dragging the Dow Jones U.S. Software Index and the NYSE Arca Networking Index down by 2.9 percent and 2.2 percent, respectively.
Outside the tech sector, considerable weakness is visible among airline stocks, as reflected by the 2.1 percent slump by the NYSE Arca Airline Index.
Energy, retail and gold stocks are also seeing notable weakness on the day, moving lower along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index rose by 0.5 percent, while Hong Kong’s Hang Seng Index spiked by 2.7 percent.
Meanwhile, the major European markets have moved to the downside on the day. While the U.K.’s FTSE 100 Index has dipped by 0.2 percent, the French CAC 40 Index is down by 1.1 percent and the German DAX Index is down by 1.4 percent.
In the bond market, treasuries are seeing modest strength after the previous session nearly unchanged. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 3.664 percent.
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