U.S. Stocks Showing Another Significant Move To The Downside

Stocks have shown a substantial move to the downside in morning trading on Monday, extending the sharp pullback seen over the two previous sessions. With the steep drop on the day, the Nasdaq and the S&P 500 have fallen to their lowest intraday levels in over a year.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 488.19 points or 1.5 percent at 32,411.18, the Nasdaq is down 358.69 points or 3 percent at 11,785.98 and the S&P 500 is down 90.91 points or 2.2 percent at 4,032.43.

Significant weakness in overseas markets has carried over onto Wall Street amid concerns about the outlook for the global economy.

Traders seem worried aggressive moves by global central banks to contain inflation could lead to a period of stagflation or an outright recession.

A continued increase in treasury yields is likely to weigh on the markets, with the yield on the benchmark ten-year note once again reaching its highest levels since November 2018.

The extended sell-off on Wall Street also comes as traders look ahead to the release of key inflation data in the coming days.

The latest snapshot of inflation could impact expectations regarding how aggressively the Federal Reserve plans to raise interest rates.

Energy stocks are turning in some of the market’s worst performances on the day, moving sharply lower along with the price of crude oil. Crude for June delivery is currently plunging $3.24 to $106.53 a barrel.

Reflecting the sell-off in the energy sector, the Philadelphia Oil Service Index is down by 6.8 percent, the NYSE Arca Oil Index is down by 4.5 percent and the NYSE Arca Natural Gas Index is down by 4 percent.

Substantial weakness is also visible among airline stocks, with the NYSE Arca Airline Index tumbling by 3.4 percent to its lowest intraday level in almost two months.

Biotechnology, semiconductor and steel stocks are also seeing considerable weakness, moving notably 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 Monday. Japan’s Nikkei 225 Index plunged by 2.5 percent, while South Korea’s Kospi 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 slumped by 1.9 percent, the U.K.’s FTSE 100 Index is down by 1.6 percent and the German DAX Index is down by 1.2 percent.

In the bond market, treasuries have bounced back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 3.127 percent.