U.S. Stocks Seeing Further Downside After Early Volatility
Stocks rebounded from an initial drop but have moved back to the downside over the course of the trading day on Tuesday. The major averages are extending the sharp pullback seen in the two previous sessions.
In recent trading, the major averages have fallen to new lows for the session. The Dow is down 337.93 points or 1 percent at 33,741.25, the Nasdaq is down 162.71 points or 1.2 percent at 13,385.35 and the S&P 500 is down 35.02 points or 0.8 percent at 4,313.85.
The continued weakness on Wall Street reflects concerns about increased tensions between Ukraine and Russia after the Russian government recognized two Ukrainian separatist regions – Donetsk and Luhansk – as sovereign states.
Russian President Vladimir Putin subsequently ordered troops into the territory as “peacekeepers,” intensifying a crisis the West fears could unleash a major war.
In response, the U.K. has announced a “first tranche” of sanctions on Russia, targeting five Russian banks and three “very high net worth” individuals.
Germany has also halted the certification of the Nord Stream 2 gas pipeline, while the U.S. plans to announce additional sanctions on Russia later in the day.
NATO Secretary General Jens Stoltenberg described the actions by Russia as moving “from covert attempts to destabilize Ukraine to overt military action.”
On the U.S. economic front, the Conference Board released a report showing a modest decrease in U.S. consumer confidence in the month of February.
The Conference Board said its consumer confidence index dipped to 110.5 in February from a downwardly revised 111.1 in January.
Economists had expected the consumer confidence index to drop to 110.0 from the 113.8 originally reported for the previous month.
Tobacco stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 2.9 percent.
Significant weakness has also emerged among retail stocks, as reflected by the 2.7 percent slump by the Dow Jones U.S. Retail Index.
Home improvement retailer Home Depot (HD) has moved sharply lower despite reporting fourth quarter results that beat analyst estimates and boosting its dividend by 15 percent.
Housing stocks are also seeing considerable weakness on the day, with the Philadelphia Housing Sector Index tumbling by 2.3 percent to its lowest intraday level in almost a year.
Natural gas, computer hardware and networking stocks have also come under pressure, moving lower along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Tuesday. Japan’s Nikkei 225 Index tumbled by 1.7 percent, while Hong Kong’s Hang Seng Index plummeted by 2.7 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index closed just below the unchanged line and the German DAX Index fell by 0.3 percent.
In the bond market, treasuries have climbed off their worst levels but continue to see modest weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.2 basis points at 1.944 percent.
Source: Read Full Article