After moving sharply lower early in the session, stocks continue to see significant weakness in afternoon trading on Tuesday. With the steep drop on the day, the major averages have once again fallen to their lowest levels in a month.
Currently, the major averages are off their worst levels of the day but still firmly negative. The Dow is down 295.43 points or 0.9 percent at 31,803.56, the Nasdaq is down 170.06 points or 1.4 percent at 11,847.61 and the S&P 500 is down 46.24 points or 1.2 percent at 3,984.37.
The extended sell-off by stocks reflects lingering concerns about the outlook for interest rates and the impact further rate hikes will have on the economy.
Stocks have been under pressure since Federal Reserve Chair Jerome Powell indicated the central bank plans to continue aggressively raising interest rates during a speech last Friday.
Powell suggested that even after the Fed finishes tightening monetary policy, rates will remain at higher levels to ensure inflation remains contained.
“Stocks turned negative after confidence and job opening data supported the argument for the Fed to stick to an aggressive stance with fighting inflation,” said Edward Moya, senior market analysts and OANDA.
” It seems like traders are leaning towards a 75 bp hike in September, a half-point in November and a 25bp increase in December,” he added. “Over the next few months, if the labor market doesn’t break and the consumer remains resilient, Wall Street might start pricing in rate hikes for February and March.”
The Conference Board released a report this morning showing consumer confidence rebounded by more than expected in the month of August.
The Conference Board said its consumer confidence index jumped to 103.2 in August from a downwardly revised 95.3 in July.
Economists had expected the consumer confidence index to climb to 97.4 from the 95.7 originally reported for the previous month.
A separate report from the Labor Department showed the number of job openings was little changed at 11.2 million on the last business day of July
Sector News
Energy stocks continue to see substantial weakness after bucking the downtrend in the previous session, with a steep drop by the price of crude oil weighing on the sector.
Crude for October delivery is currently plunging $5.91 to $91.10 a barrel after spiking $3.95 to $97.01 a barrel on Monday.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 4.6 percent, the NYSE Arca Oil Index is down by 3.8 percent and the NYSE Arca Natural Gas Index is down by 3.3 percent.
Substantial weakness also remains visible among steel stocks, as reflected by the 3.6 percent nosedive by the NYSE Arca Steel Index.
Gold, semiconductor and transportation stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while China’s Shanghai Composite Index fell by 0.4 percent.
The major European markets also finished the day mixed. While the German DAX Index rose by 0.5 percent, the French CAC 40 Index edged down by 0.2 percent and the U.K.’s FTSE 100 Index slid by 0.9 percent.
In the bond market, treasuries have continued to show a lack of direction following the volatility seen in the previous session. The yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 3.106 percent.
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