U.S. Stocks Seeing Modest Weakness Following Last Week's Strength

Stocks have moved modestly lower during trading on Tuesday, giving back ground following the strong upward move seen last week. The major averages have all moved to the downside, although selling pressure has remained subdued.

Currently, the major averages are off their worst levels but still in negative territory. The Dow is down 67.55 points or 0.2 percent at 34,770.16, the Nasdaq is down 18.98 points or 0.1 percent at 14,012.83 and the S&P 500 is down 10.95 points or 0.2 percent at 4,504.82.

Concerns about the outlook for the global economy are weighing on Wall Street following the release of disappointing Chinese and European data.

Chinese services activity expanded at the slowest pace in eight months in August, a private-sector survey showed earlier today.

Business activity in the euro zone weakened further in August as the economic downturn extended from manufacturing to the services sector.

HCOB’s final Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped to 46.7 in August from July’s 48.6, marking the lowest level since November 2020.

The Institute for Supply Management is scheduled to release its report on U.S. service sector activity in the month of August on Wednesday.

The ISM’s services PMI is expected to edge down to 52.4 in August from 52.7 in July, although a reading above 50 would still indicate growth in the sector.

On the U.S. economic front, the Commerce Department released a report showing a significant pullback in factory orders in the month of July.

The Commerce Department said factory orders tumbled by 2.1 percent in July after surging by 2.3 percent in June. Economists had expected factory orders to plunge by 2.6 percent.

Sector News

Housing stocks have shown a substantial move to the downside on the day, dragging the Philadelphia Housing Sector Index down by 3.9 percent.

Considerable weakness is also visible among gold stocks, as reflected by the 2.4 percent slump by the NYSE Arca Gold Bugs Index.

The weakness in the gold sector comes amid a decrease by the price of the precious metal, with gold for December delivery falling $15.30 to $1,951.80 an ounce.

Telecom, networking and transportation stocks are also seeing notable weakness, while some strength is visible among computer hardware and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday. Hong Kong’s Hang Seng Index plunged by 2.1 percent and China’s Shanghai Composite Index slid by 0.7 percent, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.3 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index is just below the unchanged line, the German DAX Index is down by 0.3 percent and the French CAC 40 Index is down by 0.4 percent.

In the bond market, treasuries are extending the sharp 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 7.9 basis points at 4.252 percent.

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