Global Economic Worries Cause Another Sell-Off On Wall Street - U.S. Commentary

(RTTNews) - Continuing the recent wild ride by the markets, stocks have moved sharply lower in early trading on Tuesday. The major averages have dropped firmly into negative territory, further offsetting the recovery rally that was seen last week.

The major averages have moved roughly sideways in recent trading, stuck solidly in the red. The Dow is down 364.65 points or 2.2 percent at 16,163.38, the Nasdaq is down 80.45 points or 1.7 percent at 4,696.06 and the S&P 500 is down 42.54 points or 2.2 percent at 1,929.64.

The early weakness on Wall Street reflects ongoing concerns about the global economy following the release of some disappointing Chinese economic data.

Revised estimates released by Markit showed that the Chinese manufacturing sector contracted by the most in six years in August.

A separate report also showed that the Chinese service sector expanded at the slowest pace in the current thirteen-month growth sequence.

The manufacturing index eased to 47.3 in August, down from 47.8 in July but up from the flash estimate of 47.1. The service sector index fell to 51.5 from 53.8 in July.

Adding to the worries, the Institute for Supply Management said its index of U.S. manufacturing activity fell to its lowest level in over two years in August.

The ISM said its purchasing managers index dropped to 51.1 in August from 52.7 in July, although a reading above 50 indicates continued growth in the manufacturing sector.

The decrease came as a surprise to economists, who had expected the manufacturing index to inch up to a reading of 52.8. With the unexpected decrease, the index fell to its lowest level since May of 2013.

Energy stocks have shown a substantial move to the downside in early trading, dragging the NYSE Arca Oil & Gas Index down by 4.1 percent. The weakness in the sector comes as crude oil for October delivery has plunged $3.01 to $46.19 a barrel.

Steel, financial, and computer hardware stocks are also seeing significant weakness amid a broad based sell-off on Wall Street.

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness during trading on Tuesday. Japan's Nikkei 225 Index plunged by 3.8 percent, while Hong Kong's Hang Seng Index tumbled by 2.2 percent.

The major European markets have also come under pressure on the day. While the U.K.'s FTSE 100 Index is down by 3.3 percent, the French CAC 40 Index and the German DAX Index are down by 2.8 percent and 2.9 percent, respectively.

In the bond market, treasuries are seeing some strength amid the sharp pullback on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.6 basis points at 2.174 percent.