15th Jan 2016 17:04
WASHINGTON (Alliance News) - After moving sharply lower early in the session, stocks continue to see substantial weakness in mid-day trading on Friday. The sell-off on the day has more than offset the strong upward move seen over the course of the previous session.
The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is down 405.90 points or 2.5% at 15,973.15, the Nasdaq is down 148.29 points or 3.2% at 4,466.71 and the S&P 500 is down 47.39 points or 2.5% at 1,874.45.
Multiple negative catalysts are contributing to the weakness on Wall Street, including a resumption of the recent sell-off in China.
China's Shanghai Composite Index plunged by 3.6% overnight amid reports some Chinese banks are no longer accepting stocks as collateral for loans.
A sharp pullback by the price of crude oil is also weighing on the markets, with the commodity once again falling below USD30 a barrel.
Crude oil futures are currently tumbling USD1.56 to USD29.64 a barrel after rising USD0.72 to USD31.20 a barrel in the previous session.
Negative sentiment has also been generated by a batch of largely disappointing US economic data, including a Commerce Department report showing a modest drop in retail sales in December.
The report said retail sales edged down by 0.1% in December following an upwardly revised 0.4% increase in November. Economists had expected sales to come in unchanged.
Excluding flat auto sales, retail sales still dipped by 0.1% in December after climbing by 0.3% in November. Ex-auto sales had been expected to rise by 0.2%.
A separate report from the New York Federal Reserve showed a significant contraction in regional manufacturing activity in January.
The New York Fed said its general business conditions index fell thirteen points to a negative 19.4 in January, with a negative reading indicating a contraction.
The Federal Reserve also released a report showing a bigger than expected drop in industrial production in the month of December.
The report said industrial production dropped by 0.4% in December after slumping by a revised 0.9% in November. Economists had expected production to dip by 0.2%
Meanwhile, traders have largely shrugged off a report from the University of Michigan showing a continued improvement in consumer sentiment in the month of January.
Sector News
Most of the major sectors have come under considerable selling pressure on the day, reflecting broad based weakness on Wall Street.
Steel stocks are posting particularly steep losses in mid-day trading, resulting in a 5.6% drop by the NYSE Arca Steel Index. With the loss, the index has fallen to a new record intraday low.
AK Steel (AKS), L.B. Foster (FSTR) and ArcelorMittal (MT) are turning in some of the steel sector's worst performances on the day.
Significant weakness also remains visible among semiconductor stocks, as reflected by the 4.7% loss being posted by the Philadelphia Semiconductor Index. The index has fallen to its lowest intraday level in over four months.
Industry giant Intel (INTC) has helped to lead the semiconductor sector lower despite reporting better than expected fourth quarter results. Traders seem to be reacting to softer than expected data center revenues.
Energy stocks also continue to see substantial weakness amid the drop by the price of crude oil, moving notably lower along with computer hardware, internet, and banking stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index fell by 0.5%, while Hong Kong's Hang Seng Index slumped by 1.5%.
The major European markets also saw significant weakness on the day. While the UK's FTSE 100 Index tumbled by 1.9%, the French CAC 40 Index and the German DAX Index plunged by 2.4% and 2.5%, respectively.
In the bond market, treasuries have shown a strong move to the upside amid the sell-off on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.7 basis points at 2.031%.
Copyright RTT News/dpa-AFX