U.S. Stocks Seeing Further Downside, Offsetting Post-Fed Rally

Following the pullback seen in the previous session, stocks have seen further downside in morning trading on Friday. The major averages have all slid firmly into negative territory, with the Nasdaq adding to yesterday’s steep loss.

Currently, the major averages are off their lows of the session but continue to post notable losses. The Dow is down 543.86 points or 1.5 percent at 35,353.78, the Nasdaq is down 133.67 points or 0.9 percent at 15,046.77 and the S&P 500 is down 57.27 points or 1.2 percent at 4,611.40.

With the continued downward move on the day, stocks have offset the rally seen in reaction to the Federal Reserve’s monetary policy announcement on Wednesday.

Traders initially seemed relieved the Fed’s move to accelerate the reduction in its asset purchases to $30 billion per month was not as aggressive as some had feared.

The Fed’s forecast for three interest rates hikes next year also eliminated some uncertainty, although traders now seem to be grappling with the reality of sooner-than-expected rate hikes.

Concerns about the impact of the Omicron variant of the coronavirus are also weighing on the markets along with worries about ongoing supply chain issues.

Among individual stocks, shares of Rivian (RIVN) are seeing significant weakness after the electric vehicle maker reported a steep loss in its first quarterly report as a public company and warned that it expects to miss its 2021 production target due to supply chain issues.

Restaurant operator Darden Restaurants (DRI) has also come under pressure after reporting better than expected fiscal second quarter results but forecasting full-year earnings below analyst estimates. Darden also announced the retirement of its Chairman and CEO Gene Lee.

Meanwhile, shares of Cerner (CERN) are moving sharply higher after a report from the Wall Street Journal said Oracle (ORCL) is in talks to buy the electronic-medical-records company in a deal worth around $30 billion.

Delivery giant FedEx (FDX) is also seeing notable strength after reporting fiscal second quarter results that exceeded analyst estimates on both the top and bottom lines.

Energy stocks are seeing significant weakness in morning trading, with a sharp pullback by the price of crude oil weighing on the sector.

Crude for January delivery is tumbling $1.87 to $70.51 a barrel after jumping $1.51 to $72.38 a barrel in the previous session.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 3.3 percent and the NYSE Arca Oil Index is down by 2.4 percent.

Substantial weakness has also emerged among banking stocks, as reflected by the 3.3 percent slump by the KBW Bank Index. The index has fallen to its lowest intraday level in almost three months.

Chemical, brokerage and software stocks are also seeing notable weakness, while gold stocks are bucking the downtrend amid an increase by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index tumbled by 1.8 percent, while South Korea’s Kospi rose by 0.4 percent.

Meanwhile, European stocks have moved mostly lower on the day. While the U.K.’s FTSE 100 Index has dipped by 0.2 percent, the German DAX Index is down by 1.2 percent and the French CAC 40 Index is down by 1.6 percent.

In the bond market, treasuries are extending the upward move seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4 basis points at 1.382 percent.

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