U.S. Stocks Seeing Further Downside Amid Debt Ceiling Worries

Stocks have moved mostly lower in morning trading on Wednesday, adding to the steep losses posted in the previous session. The major averages have all moved to the downside, with the tech-heavy Nasdaq pulling back further off the nine-month closing high set on Monday.

Currently, the major averages are just off their lows of the session. The Dow is down 195.00 points or 0.6 percent at 32,860.51, the Nasdaq is down 115.35 points or 0.9 percent at 12,444.89 and the S&P 500 is down 29.82 points or 0.7 percent at 4,115.76.

The continued weakness on Wall Street partly reflects lingering concerns about lawmakers’ ability to reach an agreement on increasing the U.S. debt ceiling.

While negotiations have continued this week, traders remain worried about reports suggesting a lack of progress towards a deal.

“Talks were always going to go down to the wire and an 11th hour deal is still expected to be made,” said Edward Moya, senior market analyst at OANDA. “What could be making some investors nervous is that some House Republicans might not be convinced that the X-date of June 1st is accurate or that a default would be the end of the world.”

He added, “If the actual X-date ends up being closer to June 7th, that means we could see market stress build up leading to that point.”

Meanwhile, traders are also looking ahead to release of the minutes of the Federal Reserve’s latest monetary policy meeting.

The minutes may shed additional light on the outlook for interest rates amid widespread expectations the Fed will leave rates unchanged at its next meeting in mid-June.

Sector News

Semiconductor stocks have shown a substantial move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 2.3 percent.

Shares of Analog Devices (ADI) have moved sharply lower after the chipmaker reported better than expected fiscal second quarter results but warned of a drop in revenue for the current quarter.

Significant weakness is also visible among biotechnology stocks, as reflected by the 1.9 percent drop by the NYSE Arca Biotechnology Index. The index is pulling back off its best closing level in three months.

Airline, steel and banking stocks are also seeing considerable weakness, while some strength is visible among energy stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index tumbled by 1.3 percent.

The major European markets have also shown significant moves to the downside on the day. While the French CAC 40 Index has plunged by 2.0 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both down by 2.1 percent.

In the bond market, treasuries have shown a lack of direction over the course of the morning. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 3.696 percent.

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