Stocks Seeing Further Downside In Mid-Day Trading - U.S. Commentary

(RTTNews) - With traders worried about the outlook for the Federal Reserve's stimulus program, stocks have moved notably lower during trading on Tuesday. The weakness on the day extends the pullback that was seen over the course of the previous session.

The major averages have seen some further downside in recent trading, hitting new lows for the session. The Dow is down 124.91 points or 0.8 percent at 15,883.86, the Nasdaq is down 15.85 points or 0.4 percent at 4,029.41 and the S&P 500 is down 10.06 points of 0.6 percent at 1,790.84.

With the losses on the day, the Dow and the S&P 500 are moving lower for the third straight day, pulling back below the key psychological levels of 16,000 and 1,800, respectively.

The continued pullback by stocks comes as traders continue to digest yesterday's better than expected reading on manufacturing activity.

The report from the Institute for Supply Management, which showed that the reading on national manufacturing activity unexpectedly rose to a two-year high in November, has led to concerns about the outlook for the Federal Reserve's stimulus program.

Traders seem worried that additional upbeat economic data may lead the Fed to begin scaling back its asset purchases as early as its next monetary policy meeting in two weeks.

Nonetheless, today's activity is somewhat subdued amid a lack of major U.S. economic data, with traders looking ahead to the release of a slew of data in the coming days.

While the release of the Labor Department's monthly jobs report on Friday is in the spotlight, reports on private sector employment, new home sales, and service sector activity are also likely to attract attention.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "After the impressive gains seen just over the past month, anything would be enough to see a breather in stocks but there is nothing more relevant than a rise in rates in reevaluating equity investment positions."

"This of course points to the importance of Friday's payroll figure," he added. "With respect to the U.S. economic data overall, the outlook is still very mixed."

Among individual stocks, shares of Krispy Kreme (KKD) are moving sharply lower after the doughnut maker reported weaker than expected third quarter revenues and provided disappointing guidance.

Sector News

Airline stocks continue to see substantial weakness in mid-day trading, with the NYSE Arca Airline Index down by 2.4 percent. With the loss, the index is pulling back further off the eleven-year closing high it set last Wednesday.

US Airways (LCC) is turning in one of the airline sector's worst performances, falling by 3.9 percent, while Spirit Airlines (SAVE) and SkyWest (SKYW) are also under pressure.

Significant weakness has also emerged among chemical stocks, as reflected by the 1.3 percent loss being posted by the Dow Jones Chemicals Index. Dow Chemical (DOW) and DuPont (DD) are posting notable losses.

Biotechnology, gold, and brokerage stocks are also seeing considerable weakness, while most of the other major sectors are showing more modest moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 1 percent, the German DAX Index tumbled by 1.9 percent and the French CAC 40 Index plunged by 2.7 percent.

In the bond market, treasuries are moving higher after ending the previous session firmly in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.8 basis points at 2.763 percent.