U.S. Stocks Showing A Lack Of Direction Following Recent Weakness
Following the significant downturn seen last Friday, stocks have shown a lack of direction over the course of the trading session on Tuesday. The major averages have spent the day bouncing back and forth across the unchanged line.
Currently, the major averages are all in negative territory. The Dow is down 130.32 points or 0.4 percent at 31,188.12, the Nasdaq is down 58.83 points or 0.5 percent at 11,527.03 and the S&P 500 is down 12.46 points or 0.3 percent at 3,911.80.
The choppy trading on Wall Street comes as traders express some uncertainty about the near-term outlook for the markets following recent weakness, which has dragged the major averages down to their lowest levels in over a month.
While some traders have sought to pick up stocks at reduced levels, recent bargain hunting efforts have not gained much traction amid lingering concerns about the outlook for interest rates and the global economy.
The volatility on the day also comes amid a surge in treasury yields, with the yield on the benchmark ten-year note jumping to its highest levels in almost three months.
Potentially adding to the worries about interest rates, the Institute for Supply Management released a report showing service sector activity in the U.S. unexpectedly grew at a slightly faster rate in the month of August.
The ISM said its services PMI inched up to 56.9 in August from 56.7 in July, with a reading above 50 indicating growth in the sector. The uptick surprised economists, who had expected the index to dip to 55.1.
The report is a positive sign for the economy but may have led to concerns the Federal Reserve will see the data as an indication that it can continue to aggressively raise interest rates.
Comments from Fed officials, including Chair Jerome Powell, are likely to attract attention in the coming days along with the central bank’s Beige Book.
Sector News
Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.
Networking stocks are seeing considerable weakness, however, with the NYSE Arca Networking Index falling by 1.5 percent. Earlier in the session, the index hit a one-month intraday low.
Significant weakness is also visible among tobacco stocks, as reflected by the 1.5 percent drop by the NYSE Arca Tobacco Index. The index has fallen to its lowest intraday level in well over a year.
Airline, banking and computer hardware stocks are also seeing notable weakness in afternoon trading, while commercial real estate and steel stocks have moved to the upside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. China’s Shanghai Composite Index jumped by 1.4 percent and Japan’s Nikkei 225 Index closed just above the unchanged line, while Australia’s S&P/ASX 200 Index fell by 0.4 percent.
Meanwhile, European stocks finished a choppy session mostly higher. While the German DAX Index advanced by 0.9 percent. the French CAC 40 Index and the U.K.’s FTSE 100 Index both edged up by 0.2 percent.
In the bond market, treasuries have pulled back sharply following the rebound seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 15.4 basis points at 3.347 percent.
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