U.S. Stocks Remain Notably Lower After Early Pullback

Stocks moved sharply lower early in the session on Friday and continue to see significant weakness in afternoon trading. With the pullback on the day, the major averages have more than offset the modest gains posted in the previous session.

Currently, the major averages are off their lows of the session but still firmly negative. The Nasdaq is down 229.91 points or 1.8 percent at 12,735.43, the S&P 500 is down 43.08 points or 1 percent at 4,240.66 and the narrower Dow is down 178.08 points or 0.5 percent at 33,820.96.

The weakness on Wall Street comes as traders look to cash in on recent strength in the markets, which has lifted the major averages well off their June lows to their best levels in almost four months.

Traders may be moving money out of stocks amid caution ahead of next week’s economic symposium in Jackson Hole, Wyoming.

Remarks by Federal Reserve officials at the annual symposium are likely to be in focus, as traders look for additional clues about the pace of future rate hikes.

Recent comments from some Fed officials have indicated the central bank will continue to raise interest rates aggressively at its next meeting in September.

The sell-off on Wall Street may be exaggerated by low volume as traders stick to the sidelines ahead of the Jackson Hole symposium as well as next week’s reports on durable goods orders, new home sales, and personal income and spending.

The personal income and spending report due next Friday is likely to attract particular attention, as it includes a reading on inflation said to be preferred by the Fed.

Sector News

Airline stocks continue to see substantial weakness in afternoon trading, as reflected by the 4.1 percent nosedive by the NYSE Arca Airline Index.

Considerable weakness also remains visible among semiconductor stocks, resulting in a 2.4 percent slump by the Philadelphia Semiconductor Index.

Applied Materials (AMAT) is posting a notable loss even though the semiconductor equipment maker reported better than expected fiscal third quarter results and provided upbeat guidance.

Housing stocks have also come under considerable selling pressure over the course of the session, dragging the Philadelphia Housing Sector Index down by 2.3 percent.

Steel, brokerage and computer hardware stocks are also seeing significant weakness, while pharmaceutical stocks are among the few groups bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Hong Kong’s Hang Seng Index crept up by 0.1 percent, Japan’s Nikkei 225 Index edged marginally lower and China’s Shanghai Composite Index fell by 0.6 percent.

Meanwhile, European stocks moved mostly lower on the day. The German DAX Index slumped by 1.1 percent and the French CAC 40 Index slid by 0.9 percent, although the U.K.’s FTSE 100 Index bucked the downtrend and inched up by 0.1 percent.

In the bond market, treasuries have moved sharply lower after ending the previous session slightly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.5 basis points at 2.985 percent.

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