U.S. Stocks Continue To See Considerable Weakness
After coming under pressure early in the session, stocks continue to see significant weakness in afternoon trading on Wednesday. The major averages have all moved notably lower, adding to the steep losses posted in the previous session.
Currently, the major averages remain firmly in negative territory. The Dow is down 265.09 points or 0.8 percent at 32,790.42, the Nasdaq is down 134.27 points or 1.1 percent at 12,425.98 and the S&P 500 is down 38.56 points or 0.9 percent at 4,107.02.
The continued weakness on Wall Street partly reflects lingering concerns about lawmakers’ ability to reach an agreement on increasing the U.S. debt ceiling.
While negotiations have continued this week, traders remain worried about reports suggesting a lack of progress towards a deal.
“Talks were always going to go down to the wire and an 11th hour deal is still expected to be made,” said Edward Moya, senior market analyst at OANDA. “What could be making some investors nervous is that some House Republicans might not be convinced that the X-date of June 1st is accurate or that a default would be the end of the world.”
He added, “If the actual X-date ends up being closer to June 7th, that means we could see market stress build up leading to that point.”
Meanwhile, traders are also looking ahead to release of the minutes of the Federal Reserve’s latest monetary policy meeting.
The minutes may shed additional light on the outlook for interest rates amid widespread expectations the Fed will leave rates unchanged at its next meeting in mid-June.
Semiconductor stocks have shown a substantial move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 2.6 percent.
Shares of Analog Devices (ADI) have moved sharply lower after the chipmaker reported better than expected fiscal second quarter results but warned of a drop in revenue for the current quarter.
Considerable weakness is also visible among airline stocks, as reflected by the 2.3 percent drop by the NYSE Arca Airline Index.
Steel, telecom and banking stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index tumbled by 1.3 percent.
The major European markets also showed significant moves to the downside on the day. While the German DAX Index plunged by 1.9 percent, the U.K.’s FTSE 100 Index dove by 1.8 percent and the French CAC 40 Index slumped by 1.7 percent.
In the bond market, treasuries have slid into negative territory over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.2 basis points at 3.730 percent.
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