Stocks See Further Downside Following Early Pullback - U.S. Commentary

(RTTNews) - Offsetting the recovery rally seen in the previous session, stocks have moved sharply lower during trading on Tuesday. After moving notably lower early in the session, the major averages have seen further downside as the day has progressed.

Currently, the major averages are lingering near their worst levels of the day. The Dow is down 256.21 points or 1.4 percent at 18,068.86, the Nasdaq is down 68.05 points or 1.3 percent at 5,143.84 and the S&P 500 is down 33.06 points or 1.5 percent at 2,125.98.

Continued uncertainty about the outlook for interest rates is weighing on the markets ahead of next week's Federal Reserve meeting.

While recent disappointing economic data has led many analysts to predict that the Fed will leave rates unchanged, a few central bank officials have made hawkish comments.

The Fed is scheduled to hold a two-day meeting starting next Tuesday and announce its policy decision next Wednesday afternoon.

The central bank is also due to reveal its updated economic forecasts followed by a press conference by Fed Chair Janet Yellen.

Adding to the uncertainty about the outlook for rates is the lack of major U.S. economic data scheduled to be released on the day.

The economic calendar will pick up considerably in the coming days with the release of reports on retail sales, industrial production, and producer and consumer price inflation.

A decrease by the price of crude oil has also generated selling pressure, with crude for October delivery tumbling $1.34 to $44.95 a barrel after ending Monday's session up $0.41 at $46.29 a barrel.

The steep drop by the price of crude oil has contributed to substantial weakness among energy stocks. The Philadelphia Oil Service Index has plunged by 3.7 percent, while the NYSE Arca Oil & Gas Index is down by 2.8 percent.

Gold stocks have also shown a significant move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 3.2 percent. The weakness in the sector comes despite a modest increase by the price of gold.

Steel, telecom, financial, and biotechnology stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index fell by 0.3 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slumped by 1.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index dropped by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries have come under pressure as the trading session has progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4 basis points at 1.712 percent.