Stocks Pull Back Sharply Amid Renewed Conflict In Ukraine - U.S. Commentary

(RTTNews) - After moving mostly higher in early trading on Friday, stocks have shown a substantial move back to the downside. The pullback by the markets came on the heels of reports regarding a renewed conflict between Russia and Ukraine.

The major averages are currently posting notable losses, near their lows for the session. The Dow is down 112.96 points or 0.7 percent at 16,600.62, the Nasdaq is down 22.76 points or 0.5 percent at 4,430.24 and the S&P 500 is down 11.98 points or 0.6 percent at 1,943.20.

Stocks pulled back sharply on the heels of reports that Ukrainian forces attacked and partially destroyed a column of Russian armored personnel carriers that had crossed the border.

Andriy Lysenko, a spokesman for the Ukrainian military, told reporters that Ukrainian troops engaged the vehicles after they were spotted crossing a rebel-held section of the border under cover of darkness.

However, the Russian government has denied the claims that its forces have crossed the border and accused the Ukrainian government of trying to block efforts to provide humanitarian aid.

The strength seen earlier in the day came on the heels of a mixed batch of U.S. economic data, including tame inflation data from the Labor Department.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in July after climbing by 0.4 percent in June. The modest increase by the index matched economist estimates.

The modest price growth offset some of the recent concerns about inflation and its potential impact on the outlook for monetary policy.

A separate report from the Federal Reserve showed a slightly bigger than expected increase in industrial production in July, while a report from Thomson Reuters and the University of Michigan showed an unexpected deterioration in consumer sentiment in August.

Sector News

Most of the major sectors have turned lower over the course of the trading day, contributing to the sharp pullback by the broader markets.

Brokerage stocks have come under considerable selling pressure, dragging the NYSE Arca Broker/Dealer Index down by 1.2 percent. MarketAxess (MKTX) and Piper Jaffray (PJC) are posting notable losses.

Significant weakness has also emerged among retail stocks, as reflected by the 1.1 percent loss being posted by the Dow Jones Retail Index. Nordstrom (JWN) is leading the sector lower after reporting weaker than expected second quarter same-store sales growth.

Biotechnology, trucking, and airline stocks have also moved to the downside, while modest strength remains visible among natural gas stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index inched up by less than a tenth of a percent, while Hong Kong's Hang Seng Index advanced by 0.6 percent.

Meanwhile, the major European markets came under pressure on the news from Ukraine, ending the day mixed. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the German DAX Index tumbled by 1.4 percent and the French CAC 40 Index dropped by 0.7 percent.

In the bond market, treasuries have moved sharply higher amid the renewed geopolitical concerns. As a result, the yield on the benchmark ten-year note, which moves opposite of its price is down by 8.1 basis points at 2.319 percent.