Stocks Plummet To Multi-Months Lows Amid Overarching Concerns - U.S. Commentary

(RTTNews) - Stocks moved sharply lower over the course of the trading day on Friday, extending the sell-off that was seen in the previous session. With the steep losses on the day, all three major averages ended the session at multi-month closing lows.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow plummeted 530.94 points or 3.1 percent to 16,459.75, the Nasdaq tumbled 171.45 points or 3.5 percent to 4,706.04, and the S&P 500 plunged 64.84 points or 3.2 percent to 1,970.89.

With the continued weakness on the day, the major averages all fell sharply for the week. The Nasdaq dove by 6.8 percent, while the Dow and the S&P 500 both dropped by 6.8 percent.

The continued sell-off on Wall Street partly reflected the recent downward momentum for the markets, which came amid overarching concerns about developing economies and the outlook for U.S. interest rates.

Adding to the worries, the Chinese markets showed another steep decline overnight, with the Shanghai Composite Index plunging by 4.3 percent.

The weakness among Chinese stocks came as a report from Markit and Caixin showed that manufacturing activity in China slid to a six-year low in August.

The report said the preliminary reading on Chinese manufacturing activity dropped to 47.1 in August from 47.8 in July.

Markit also released a separate report showing that its preliminary reading on U.S. manufacturing activity came in at 52.9 in August compared to the final July reading of 53.8.

Overall trading activity was somewhat subdued on a summer Friday, however, potentially exaggerating the downward move by the markets.

Sector News

Most of the major sectors showed significant moves to the downside on the day, reflecting the broad-based selling pressure on Wall Street.

Software stocks showed a particularly steep drop on the day, dragging the Dow Jones Software Index down by 4.2 percent. With the decrease, the index ended the session at its worst closing level in well over four months.

Intuit (INTU) helped to lead the software sector lower, with the tax software developer plummeting by 13.3 percent after reporting its quarterly results.

Considerable weakness was also visible among airline stocks, as reflected by the 3.5 percent loss posted by the NYSE Arca Airline Index. The drop pulled the index down to its lowest closing level in almost ten months.

Energy stocks also moved sharply lower along with the price of oil, while retail, internet, gold, and steel stocks also saw notable weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw substantial weakness following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index dove by 3 percent, while Hong Kong's Hang Seng Index slumped by 1.5 percent.

The major European markets also moved sharply lower on the day. While the U.K.'s FTSE 100 Index tumbled by 2.8 percent, the German DAX Index and the French CAC 40 Index plummeted by 3 percent and 3.2 percent, respectively.

In the bond market, treasuries extended a recent uptrend amid the continued weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 3 basis points to 2.054 percent.

Looking Ahead

Next week's trading may be impacted by a slew of new U.S. economic data, including reports on new home sales, durable goods orders, and personal income and spending.