RTTNews - Stocks are continuing to tread firmly in negative territory in mid-afternoon trading on Tuesday, as sentiment that today's overwhelmingly positive news on the economic front was largely priced into the market sparked a broad based sell-off.
In economic news today, the Institute for Supply Management released a report showing that economic activity in the manufacturing sector expanded in the month of August following eighteen consecutive months of contraction.
Separately, the National Association of Realtors said that pending home sales rose by much more than expected, increasing for the sixth consecutive month.
Meanwhile, the Commerce Department's data on construction spending showed that spending fell modestly in the month of July, as a decrease in spending on public construction more than offset a modest increase in spending on private construction.
On the corporate front, online auction giant eBay (EBAY) announced that it has signed an agreement to sell its Skype communications unit to a group of private investors for about $1.9 billion in cash and a $125 million note.
The major averages have moved roughly sideways in recent trading, lingering well below the unchanged line. The Dow is currently down 165.73 at 9,330.55, the Nasdaq is down 36.03 at 1,973.03 and the S&P 500 is down 19.73 at 1,000.89.
Nearly all of the Dow components are trading in negative territory, contributing to the steep loss being shown by the blue chip index.
Some of the heaviest losses in the Dow are being shown by its financial components, with Bank of America (BAC) leading the way lower with a 4.7 percent loss. The stock is backing further off of the ten-month closing high set on Friday.
Further reflecting the weakness in financials are shares of American Express (AXP), which are down 4.1 percent. With the retreat, the stock is also pulling back further off last week's ten-month closing high.
Notable losses are also being shown by shares of General Electric (GE) and Alcoa (AA), which are down by 4.1 percent and 3.4 percent, respectively. General Electric is poised to close at a two-week low, while Alcoa is extending its losses and is looking to close at its worst level in nearly one month's time.
3M (MMM), Intel (INTC), Microsoft (MSFT) and DuPont (DD) are also moving sharply lower on the day, while Wal-Mart (WMT) is the only Dow component bucking the downtrend, eking out a 0.2 percent gain in mid-afternoon trading.
Airline stocks are continuing to turn in disappointing performances, with the NYSE Arca Airline Index posting a 4.5 percent loss in mid-afternoon trading. With the retreat, the index is moving further away from the seven-month closing high it set late last month.
Within the sector, shares of US Airways (LCC) are down 7.9 percent, pulling back further off last week's four and a half month high.
Financial stocks are also seeing notable weakness with the NYSE Arca Securities Broker/Dealer Index and the Kbw Bank Index slipping by 4.2 percent and 4.3 percent, respectively.
The pullback is dragging the brokerage index down off Monday's eleven-month closing high, while the bank index is moving off of last week's eight and a half month closing high.
Commercial real estate, housing, healthcare provider and networking stocks are also falling, among a slew of others, reflecting the day's broad based weakness.
In Focus: Economic Data
As mentioned above, the Institute for Supply Management released a report showing that its manufacturing index jumped to 52.9 in August from 48.9 in July, with a reading above 50 indicating an expansion in the sector following eighteen consecutive months of contraction.
With the increase, the index rose to its highest level since June of 2007. On average, economists had been expecting a more modest increase by the index to a reading of 50.2, which would have still indicated modest growth in the sector.
Separately, pending home sales rose 3.2 percent to 97.6 in July from a reading of 94.6 in June. The increase, which exceeded economist estimates of 1.5 percent growth, lifted the index to its highest level since June of 2007.
Meanwhile, the Commerce Department released a report showing that construction spending fell 0.2 percent in July following a downwardly revised 0.1 percent increase in June. Economists had expected spending to fall 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Tuesday. Japan's benchmark Nikkei 225 Index closed up 0.4 percent, although it was well off its best levels of the day.
Meanwhile, the major European closed notably lower, with the French CAC 40 Index and the U.K.'s FTSE 100 sliding by 1.9 percent and 1.8 percent, respectively while the German DAX Index fell by 2.5 percent.
In the bond markets, treasuries have extended their gains amid the pullback on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.375 percent, posting a loss of 2.6 basis points.
For comments and feedback: contact email@example.com