U.S. Stocks Continue To Post Steep Losses In Mid-Day Trading
Following the sell-off seen earlier in the session, stocks continue to see substantial weakness in mid-day trading on Thursday. The major averages have climbed off their worst levels of the day in recent trading but continue to post steep losses.
Currently, the major averages are all sharply lower, although the Nasdaq is underperforming its counterparts. While the Nasdaq is down 512.98 points or 4.3 percent at 11,543.55, the Dow is down 610.11 points or 2.1 percent at 28,490.39 and the S&P 500 is down 102.52 points or 2.9 percent at 3,478.32.
The sell-off on Wall Street largely reflects profit taking, as some traders look to cash in on some of the recent strength in the markets.
Stocks have continued to trend higher in recent weeks, leading some analysts to suggest the recovery by the markets has been overdone.
The Nasdaq and the S&P 500 both ended Wednesday’s trading at record closing highs, while the Dow reached its best closing level in over six months.
In a marked reversal from recent sessions, tech stocks are leading the way lower, as reflected by the nosedive by the Nasdaq.
Tech giants Apple (AAPL), Facebook (FB), Microsoft (MSFT) and Amazon (AMZN) are all posting steep losses on the day following recent strength.
On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits tumbled by more than expected in the week ended August 29th.
The Labor Department said initial jobless claims declined to 881,000, a decrease of 130,000 from the previous week’s revised level of 1.011 million.
Economists had expected jobless claims to drop to 950,000 from the 1.006 million originally reported for the previous week.
However, Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics, noted the decrease in jobless claims was largely due to a shift by the Labor Department to a new seasonal adjustment process.
The Labor Department is scheduled to release its more closely watched monthly employment report for August on Friday, with employment expected to surge up by 1.4 million jobs.
A separate report from the Institute for Supply Management showed a modest slowdown in the pace of growth in service sector activity in the month of August.
The ISM said its services PMI dipped to 56.9 in August from 58.1 in July, but a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 57.0.
Networking stocks continue to see substantial weakness in mid-day trading, with the NYSE Arca Networking Index plunging by 7.5 percent. Earlier in the session, the index hit its lowest intraday level in well over a month.
Ciena (CIEN) is leading the sector lower after reporting better than expected fiscal third quarter results but warning an orders slowdown related to the COVID-19 pandemic is likely to adversely impact revenue for “a few quarters.”
Considerable weakness also remains visible among software, semiconductor and computer hardware, as reflected by the steep drop by the tech-heavy Nasdaq.
Retail stocks have also shown a significant move to the downside on the day, dragging the Dow Jones U.S. Retail Index down by 3.7 percent. The index is pulling back off a record closing high.
Housing, chemical, biotechnology and gold stocks are also seeing notable weakness amid broad-based selling pressure on Wall Street.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, although stocks in China and Hong Kong bucked the uptrend. Japan’s Nikkei 225 Index advanced by 0.9 percent, while South Korea’s Kospi jumped by 1.3 percent.
Meanwhile, the major European markets moved to the downside over the course of the day. While the French CAC 40 Index fell by 0.4 percent, the German DAX Index and the U.K.’s FTSE 100 Index tumbled by 1.4 percent and 1.5 percent, respectively.
In the bond market, treasuries are extending the upward trend seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.4 basis points at 0.627 percent.
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