U.S. Stocks Seeing Further Downside Following Early Pullback

Stocks came under pressure in early trading on Friday and have seen further downside over the course of the session. The major averages have all moved notably lower, giving back ground following the rally seen in the previous session.

In recent trading, the major averages have fallen to new lows for the session. The Nasdaq is down 211.26 points or 1.5 percent at 13,714.79, the S&P 500 is down 50.69 points or 1.1 percent at 4,454.41 and the Dow is down 280.08 points or 0.8 percent at 34,627.03.

The pullback on Wall Street may partly reflect profit taking, with some traders cashing in on yesterday’s gains ahead of the next week’s Federal Reserve meeting.

While the Fed is widely expected to leave interest rates unchanged next week, the latest batch of U.S. economic data has reignited concerns about the possibility of future rate hikes.

The Labor Department released a report this morning may showing a bigger than expected increase in U.S. import prices in the month of August as well as a much bigger than expected surge in U.S. export prices.

The Labor Department said import prices climbed by 0.5 percent in August after a downwardly revised 0.1 percent uptick in July.

Economists had expected import prices to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the report said export prices spiked by 1.3 percent in August after climbing by a downwardly revised 0.5 percent in July.

Economist had expected export prices to increase by 0.3 percent compared to the 0.7 percent advance originally reported for the previous month.

A separate report released by the New York Fed showed a substantial turnaround in New York manufacturing activity in the month of September.

The Federal Reserve also released a report showing U.S. industrial production increased by much more than expected in the month of August.

The report said industrial production climbed by 0.4 percent in August following a downwardly revised 0.7 percent advance in July.

Economists had expected industrial production to inch up by 0.1 percent compared to the 1.0 percent jump originally reported for the previous month.

Meanwhile, traders have largely shrugged off a report from the University of Michigan showed a notable decrease in near-term and long-term inflation expectations.

Sector News

Semiconductor stocks have moved sharply lower over the course of the session, resulting in a 2.7 percent plunge by the Philadelphia Semiconductor Index.

Substantial weakness also remains visible among housing stocks stocks, as reflected by the 2.6 percent slump by the Philadelphia Housing Sector Index.

Software stocks are also seeing considerable weakness on the day, with the Dow Jones U.S. Software Index tumbling by 2.0 percent.

Adobe (ADBE) is posting a steep loss despite reporting fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines.

Retail, computer hardware and networking stocks have also moved notably lower, while gold stocks are among the few groups bucking the downtrend amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged by 1.1 percent, while Hong Kong’s Hang Seng Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index jumped by 1.0 percent, the German DAX Index and the U.K.’s FTSE 100 Index climbed by 0.6 percent and 0.5 percent, respectively.

In the bond market, treasuries remain firmly negative after coming under pressure in early trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.0 basis points at 4.318 percent.

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