U.S. Stocks Extending Sell-Off Amid Interest Rate, Economic Worries

Extending the sell-off seen over the past several sessions, stocks have moved sharply lower during trading on Thursday. With the continued downward move, the major averages have once again fallen to their lowest levels in over a month.

Currently, the major averages are just off their lows of the session. The Dow is down 244.21 points or 0.8 percent at 31,266.22, the Nasdaq is down 248.97 points or 2.1 percent at 11,567.23 and the S&P 500 is down 49.99 points or 1.3 percent at 3,905.01.

The continued weakness on Wall Street reflects lingering concerns about higher interest rates and the impact on the global economy.

Disappointing manufacturing data out of Europe and Asia has added to worries about the potential for a global recession.

A steep drop by shares of Nvidia (NVDA) is also weighing on the markets, with the graphics chipmaker plunging by 11.1 percent in pre-market trading.

The decline by Nvidia comes after the company warned approximately $400 million in potential sales to China could be impacted by new U.S. licensing requirements on shipments of some of its most advanced chips.

Fellow chipmaker Advanced Micro Devices (AMD) has also moved notably lower after saying some of its chips would also be impacted by the new requirements.

The extended sell-off on Wall Street also comes as traders look ahead to Friday’s closely watched monthly jobs report.

The report, which is expected to show employment jumped by 300,000 jobs in August after surging by 528,000 jobs in July, could impact the outlook for interest rates.

With the more closely watched monthly jobs report looming, the Labor Department released a report this morning unexpectedly showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended August 27th.

The report showed initial jobless claims edged down to 232,000, a decrease of 5,000 from the previous week’s revised level of 237,000.

The dip came as a surprise to economists, who had expected jobless claims to inch up to 248,000 from the 243,000 originally reported for the previous week.

A report released by the Institute for Supply Management showed its reading on U.S. manufacturing activity remained at a two-year low in August.

The ISM said its manufacturing PMI came in at 52.8 in August, unchanged from July. Economists had expected the index to edge down to 52.0.

While a reading above 50 still indicates growth in the manufacturing sector, the index remained at its lowest level since hitting 52.4 in June 2020.

With Nvidia helping lead the way lower, semiconductor stocks are seeing substantial weakness on the day, dragging the Philadelphia Semiconductor Index down by 4.2 percent to its lowest intraday level in well over a month.

Concerns about the global economic outlook are also contributing to considerable weakness among steel stocks, as reflected by the 3.7 percent nosedive by the NYSE Arca Steel Index. The index has also tumbled to a one-month low.

Oil service stocks are also seeing significant weakness on the day, resulting in a 3.7 percent plunge by the Philadelphia Oil Service Index.

The weakness among oil service stocks comes amid another steep drop by the price of crude oil, with crude for October delivery slumping $2.23 to $87.32 a barrel.

Gold, computer hardware, airline and networking stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index tumbled by 1.5 percent, while China’s Shanghai Composite Index fell by 0.5 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has plunged by 1.9 percent, the German DAX Index and French CAC 40 Index are both down by 1.7 percent.

In the bond market, treasuries have moved sharply lower over the course of the morning. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 14.7 basis points at 3.280 percent.

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