U.S. Stocks Seeing Continued Weakness After Early Downturn

Following the downturn seen early in the session, stocks have seen further downside over the course of the trading day on Wednesday. With the drop on the day, the major averages are extending the pullback seen in the previous session.

Currently, the major averages are lingering near their worst levels of the day. The Dow is down 324.05 points or 1 percent at 32,666.07, the Nasdaq is down 135.32 points or 1.1 percent at 11,946.07 and the S&P 500 is down 46.58 points or 1.1 percent at 4,085.57.

The weakness on Wall Street may partly reflect a reaction to comments from JPMorgan Chase (JPM) CEO Jamie Dimon, who urged investors to brace for an economic hurricane.

“You know, I said there’s storm clouds but I’m going to change it… it’s a hurricane,” Dimon said at a financial conference in New York, according to CNBC.

“You better brace yourself,” he added. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

Negative sentiment may also have been generated in reaction to a Labor Department report showing job openings tumbled by 455,000 to 11.4 million in April.

Stocks also came under pressure amid a jump by treasury yields, with the yield on the benchmark ten-year note climbing back above 2.9 percent.

The advance by yields came after the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly expanded at a slightly faster rate in the month of May.

The ISM said its manufacturing PMI inched up to 56.1 in May from 55.4 in April, with a reading above 50 indicating growth in the sector. The uptick surprised economists, who had expected the index to dip to 54.5.

Sector News

Airline stocks continue to see substantial weakness on the day, resulting in a 4.6 percent nosedive by the NYSE Arca Airline Index.

Considerable weakness also remains visible among banking stocks, as reflected by the 2.6 percent slump by the KBW Bank Index.

Semiconductor stocks have also shown a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 2.5 percent.

Healthcare, brokerage and biotechnology stocks are also seeing notable weakness, while gold and energy stocks are bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 0.7 percent, while Hong Kong’s Hang Seng Index fell by 0.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index dipped by 0.3 percent, the French CAC 40 Index slid by 0.8 percent and the U.K.’s FTSE 100 Index slumped by 1 percent.

In the bond market, treasuries are extending the notable pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.9 basis points at 2.933 percent.

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