09.09.2015 22:18:28
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Stocks Close Sharply Lower After Seeing Early Strength - U.S. Commentary
(RTTNews) - After moving sharply higher early in the session, stocks showed a substantial downturn over the course of the trading day on Wednesday. With the pullback on the day, the markets partly offset the rally that was seen in the previous session.
The major averages ended the day firmly in the red, just off their lows for the session. The Dow tumbled 239.11 points or 1.5 percent to 16,253.57, the Nasdaq fell 55.40 points or 1.2 percent to 4,756.53 and the S&P 500 dropped 27.37 points or 1.4 percent to 1,942.04.
The initial upward move on Wall Street partly reflected a positive reaction to continued strength in the overseas markets, including additional gains by Chinese stocks.
China's Shanghai Composite Index jumped by 2.3 percent, adding to the 2.9 percent gain posted in the previous session.
Analysts suggested the continued strength among Chinese stocks was partly due to optimism that the government will take additional steps to support the economy.
Buying interest waned not long after the start of trading, however, as traders seemed reluctant to continue picking up stocks amid a lack of major U.S. economic data.
The subsequent pullback by the markets partly reflected the recent volatility on Wall Street, which has led to big swings by the markets over the past few weeks.
Peter Cardillo, chief market economist at Rockwell Global Capital, said the persistent high volatility coupled with wider gyrations is likely to diminish investors' appetite for equities in the short run.
A sharp pullback by the price of crude oil also weighed on the markets, with crude for October delivery tumbling $1.79 to $44.15 a barrel.
The decrease by the price of oil came as the Energy Information Administration lowered its crude oil price forecasts for this year and next.
Sector News
Oil service stocks saw substantial weakness amid the steep drop by the price of crude oil, dragging the Philadelphia Oil Service Index down by 2.9 percent.
Significant weakness was also visible among gold stocks, which moved lower along with the price of gold. With gold for December delivery slumping $19 to $1,102 an ounce, the NYSE Arca Gold Bugs Index dropped by 3 percent.
Profit taking also contributed to considerable weakness among semiconductor, biotechnology, and software stocks, which turned in some of the best performances on Tuesday.
Most of the other major sectors also came under pressure on the day, reflecting the broad based weakness that emerged on Wall Street.
Other Markets
In overseas trading, most stock markets across the Asia-Pacific region moved sharply higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 7.7 percent, while Hong Kong's Hang Seng Index leapt by 4.1 percent.
The major European markets also finished the day higher but well off their best levels. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both jumped by 1.4 percent.
In the bond market, treasuries turned higher over the course of the session after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 2.181 percent after reaching a high of 2.254 percent.
Looking Ahead
Following a couple quiet days on the U.S. economic front, trading on Thursday may be impacted by reaction to reports on weekly jobless claims, import and export prices, and wholesale inventories.
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