U.S. Stocks Remain Mostly Lower But Off Worst Levels

Stocks have climbed well off their worst levels of the day but remain mostly lower in afternoon trading on Friday. With the decrease on the day, the major averages are extending the notable pullback seen over the past several sessions.

After falling by almost 300 points, the Dow is currently posting a modest loss, down 48.11 points or 0.2 percent at 30,727.32. The Nasdaq is down 50.65 points or 0.5 percent at 10,978.09 and the S&P 500 is down 9.82 points or 0.3 percent at 3,775.56.

Concerns about the possibility of tighter monetary policy triggering a global recession continue to weigh on the markets.

Central banks from around the world have signaled their intent to continue to raising interest rates in an effort to fight inflation while acknowledging they can’t guarantee a “soft landing” for the economy.

Stocks came under pressure following the release of a report from the Institute for Supply Management showing the pace of growth in U.S. manufacturing activity slowed by more than expected in the month of June.

The ISM said its manufacturing PMI slid to 53.0 in June from 56.1 in May, although a reading above 50 still indicates growth in the sector. Economists had expected the index to dip to 54.9.

With the bigger than expected decrease, the manufacturing PMI slumped to its lowest level since hitting 52.4 in June of 2020.

A separate report from the Commerce Department showed U.S. construction spending unexpectedly edged lower in the month of May.

“Wall Street isn’t liking seeing so many key economic indicators have a trajectory that looks like they will retest some of the pandemic lows,” said Edward Moya, Senior Market Analyst at OANDA.

He added, “A choppy period seems likely until investors feel confident that the economy is still in decent shape and that the Fed won’t miss the opportunity to decelerate their tightening pace in September.”

Sector News

Semiconductor stocks continue to turn in some of the market’s worst performances on the day, with the Philadelphia Semiconductor Index plunging by 4.7 percent to its lowest intraday level in well over a year.

Micron Technology (MU) is posting a steep loss after the chipmaker reported better than expected fiscal third quarter earnings but provided disappointing revenue guidance.

Considerable weakness has also emerged among computer hardware stocks, as reflected by the 3.6 percent nosedive by the NYSE Arca Computer Hardware Index. The index has also fallen to a one-year intraday low.

Oil service stocks also continue to see significant weakness on the day despite a sharp increase by the price of crude oil. While crude for August delivery is jumping $2.31 to $108.07 a barrel, the Philadelphia Oil Service Index is down by 2.3 percent.

Steel and networking stocks also remain notably lower, while housing, gold and utilities stocks have shown strong moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index dove by 1.7 percent, while China’s Shanghai Composite Index dipped by 0.3 percent.

Meanwhile, the major European markets turned in a lackluster performance on the day. While the U.K.’s FTSE 100 Index closed just below the unchanged, the French CAC 40 Index inched up by 0.1 and the German DAX Index edged up by 0.2 percent.

In the bond market, treasuries have pulled back well off their best levels of the day but remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down 7.7 basis points at 2.895 percent.

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