Stocks Close Sharply Lower After Early Sell-Off - U.S. Commentary

(RTTNews) - Stocks came under considerable selling pressure in early trading on Tuesday and remained stuck firmly in the red throughout the trading session. The steep losses on the day more than offset the strength seen in the previous session.

The major averages ended the session sharply lower but well off their worst levels of the day. The Dow slumped 179.72 points or 1.1 percent to 16,330.47, the Nasdaq plunged 72.23 points or 1.5 percent to 4,756.72 and the S&P 500 tumbled 24.23 points or 1.2 percent to 1,942.74.

The sell-off on Wall Street was partly attributed to ongoing uncertainty about the outlook for U.S. monetary policy.

Following last week's Federal Reserve decision to leave interest rates unchanged, traders are questioning when the central bank will eventually raise rates.

Some analysts believe the Fed will hike rates at a meeting next month, while others expect the rate increase to be delayed until December.

Later in the week, reports on durable goods orders, new home sales and consumer sentiment could impact the outlook for interest rates.

Weakness in the European markets also weighed on U.S. stocks, with the major averages in the region all pulling back sharply.

Concerns that auto giant Volkswagen could face a massive fine for cheating on emissions tests contributed the sell-off by European stocks.

Among individual stocks, shares of Thor Industries (THO) fell sharply on the day after the recreational vehicle maker reported fourth quarter sales that came in below analyst estimates.

Food producer ConAgra (CAG) also came under pressure after warning currency issues will impact profits in its consumer foods segment in the current quarter.

On the other hand, shares of Jack in the Box (JACK) moved notably higher after the restaurant chain announced a new $200 million share buyback program for fiscal 2016.

Sector News

Most of the major sectors moved to the downside on the day, with gold stocks particularly steep losses for the session. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index plunged by 5.5 percent.

The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $8 to $1,124.80 an ounce.

Steel stocks also saw substantial weakness amid concerns about the global demand, with the NYSE Arca Steel Index plummeting by 4.3 percent. Brazil's CSN (SID) and U.S. Steel (X) turned in two of the sector's worst performances.

Considerable weakness was also visible among airline stocks, as reflected by the 3 percent loss posted by the NYSE Arca Airline Index. The index pulled back further off the one-month highs set last Thursday.

Computer hardware, housing, and natural gas stocks also saw significant weakness, reflecting the broad based weakness on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday. Hong Kong's Hang Seng Index edged up by 0.2 percent, while Australia's All Ordinaries Index climbed by 0.7 percent. The Japanese markets remained closed on the day.

Meanwhile, the major European markets showed substantial moves to the downside. While the U.K's FTSE 100 Index slumped by 2.8 percent, the French CAC 40 Index and the German DAX Index plummeted by 3.4 percent and 3.8 percent, respectively.

In the bond market, treasuries moved sharply higher amid the weakness on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 8.9 basis points to 2.125 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on weekly jobless claims, durable goods orders, and new home sales.