U.S. Stocks Remain Sharply Lower After Early Sell-Off

Stocks moved sharply lower early in the session on Tuesday and continue to see significant weakness in afternoon trading. The major averages have all moved to the downside after ending the previous session mixed.

Currently, the major averages are off their worst levels but remain firmly negative. The Dow is down 508.62 points or 1.3 percent at 39,058.23, the Nasdaq is down 188.96 points or 1.2 percent at 16,207.87 and the S&P 500 is down 49.67 points or 1.0 percent at 5,194.10.

The sell-off on Wall Street partly reflects renewed uncertainty about the outlook for interest rates as traders digest recent U.S. economic data.

Last Friday’s closely watched inflation data combined with Monday’s stronger than expected manufacturing data have raised questions about whether the Federal Reserve will lower rates in June.

Treasury yields moved sharply higher in reaction to the data on Monday and have seen further upside today, with the yield on the benchmark ten-year note reaching a four-month high.

While CME Group’s FedWatch Tool is currently still indicating 56.3 percent chance the Fed will cut rates by a quarter point in June, that is down from 63.8 percent a week ago.

Traders may also be taking the opportunity to cash in on recent strength in the markets ahead of remarks by Fed Chair Jerome Powell on Wednesday and the release of the monthly jobs report on Friday.

On the U.S. economic front, the Commerce Department released a report showing a significant rebound in factory orders in the month of February.

The Commerce Department said factory orders surged by 1.4 percent in February after plunging by a revised 3.8 percent in January.

Economists had expected factory orders to jump by 1.0 percent compared to the 3.6 percent slump originally reported for the previous month.

Sector News

Housing stocks continue to see substantial weakness on the day, with the Philadelphia Housing Sector Index plunging by 2.8 percent. The index is pulling back further off last Thursday’s record closing high.

Considerable weakness has also emerged among networking stocks, as reflected by the 2.7 percent nosedive by the NYSE Arca Networking Index.

Semiconductor stocks have also shown a significant move to the downside, dragging the Philadelphia Semiconductor Index down by 2.2 percent.

Healthcare, computer hardware and airline stocks are also seeing notable weakness, while energy stocks are bucking the downtrend amid a sharp increase by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. China’s Shanghai Composite Index edged down by 0.1 percent, while Japan’s Nikkei 225 Index inched up by 0.1 percent and Hong Kong’s Hang Seng Index surged by 2.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index slumped by 1.1 percent, the French CAC 40 Index slid by 0.9 percent and the U.K.’s FTSE 100 Index dipped by 0.2 percent.

In the bond market, treasuries have climbed off their worst levels of the day but remain firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.4 basis points at 4.363 percent.

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