U.S. Stocks Show Significant Downturn After Seeing Early Rally

After moving sharply higher early in the session on Tuesday, stocks have shown a significant downturn over the course of the trading day. The major averages have pulled back well off their early highs and into negative territory.

Currently, the major averages are off their lows of the session but remain in the red. The Dow is down 195.66 points or 0.7 percent at 29,065.15, the Nasdaq is down 28.36 points or 0.3 percent at 10,774.56 and the S&P 500 is down 20.18 points or 0.6 percent at 3,634.86.

With the notable pullback on the day, the Dow and the S&P 500 have fallen to their lows intraday levels since late 2020.

Bargain hunting contributed to the early rebound on Wall Street, as traders pick up stocks at reduced levels following recent weakness.

Buying interest waned over the course of the morning, however, as concerns about higher interest rates and the outlook for the global economy continued to weigh on the markets.

The subsequent pullback by stocks came as treasury yields once again surged after an initial move to the downside, with the yield on the benchmark ten-year note reaching its highest levels in over twelve years.

A turnaround by the value of the U.S. dollar has also led to renewed selling pressure on Wall Street amid concerns about the impact on corporate profits.

The U.S. dollar index is currently up by 0.2 percent at 114.36 after falling as much as 0.6 percent earlier in the day.

On the U.S. economic front, a report released by the Commerce Department showed a modest decrease in new orders for U.S. manufactured durable goods in the month of August.

The Commerce Department said durable goods orders slipped by 0.2 percent in August after edging down by 0.1 percent in July. Economists had expected durable goods orders to decrease by 0.4 percent.

Excluding a steep drop in orders for transportation equipment, durable goods orders inched up by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

Meanwhile, a separate Commerce Department report unexpectedly showed a substantial rebound in new home sales in the month of August.

The report showed new home sales skyrocketed by 28.8 percent to an annual rate of 685,000 in August after plunging by 8.6 percent to a revised rate of 532,000 in July.

The surge surprised economists, who had expected new home sales to slump by 2.2 percent to an annual rate of 500,000 from the 511,000 originally reported for the previous month.

The sharp increase came after new home sales tumbled to their lowest annual rate since hitting 532,000 in March 2016.

The Conference Board also released a report showing a bigger than expected improvement in consumer confidence in the month of September.

The organization said its consumer confidence index climbed to 108.0 in September from an upwardly revised 103.6 in August.

Economists had expected the consumer confidence index to inch up to 104.3 from the 103.2 originally reported for the previous month.

Sector News

Interest rate-sensitive utilities stocks have come under pressure over the course of the session, dragging the Dow Jones Utility Average down by 1.7 percent to a three-month intraday low.

Considerable weakness has also emerged among banking stocks, as reflected by the 1.6 percent slump by the KBW Bank Index. With the drop, the index has fallen to its lowest intraday level in well over a year.

Tobacco stocks have also shown a notable move to the downside, with the NYSE Arca Tobacco Index falling by 1.5 percent to a two-year intraday low.

Meanwhile, energy stocks have pulled back well off their best levels of the day but remain firmly positive amid a rebound by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index surged by 1.4 percent.

Meanwhile, the major European markets moved to the downside over the course of the session. While the German DAX Index slid by 0.7 percent, the U.K.’s FTSE 100 Index fell by 0.5 percent and the French CAC 40 Index dipped by 0.3 percent.

In the bond market, treasuries have shown a significant downturn after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.3 basis points at 3.961 percent after hitting a low of 3.809 percent.

Business News