U.S. Stocks Pull Back Sharply After Early Move To The Upside

(RTTNews) - Stocks moved to the upside early in the trading day on Thursday but have come under pressure over the course of the session. The major averages have pulled back well off their highs of the session and into negative territory.

The major averages have seen further downside in recent trading, falling to new lows for the session. The Dow is down 392.65 points or 1.0 percent at 40,450.14, the Nasdaq is down 160.03 points or 0.9 percent at 17,439.37 and the S&P 500 is down 37.76 points or 0.7 percent at 5,484.54.

The downturn on Wall Street comes as some disappointing data has led to concerns about the outlook for the U.S. economy, offsetting optimism about a near-term interest rate cut by Federal Reserve.

The Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly contracted at an accelerated rate in the month of July.

The ISM said its manufacturing PMI fell to 46.8 in July from 48.5 in June, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 48.8 percent.

With the bigger than expected decrease, the manufacturing PMI dropped to its lowest level since hitting 46.6 in November 2023.

"Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, "Production execution was down compared to June, likely adding to revenue declines, putting additional pressure on profitability."

Early in the session, stocks benefited from a positive reaction to upbeat earnings news from Facebook parent Meta Platforms (META).

Shares of Meta are surging by 6.2 percent after the company reported better than expected second quarter results and provided upbeat guidance.

Restaurant chain Shake Shack (SHAK) is also seeing substantial strength after reporting second quarter revenues that exceeded analyst estimates.

On the other hand, shares of Moderna (MRNA) have plunged by 18.5 percent after the drugmaker reported better than expected second quarter results but lowered its full-year sales guidance.

Sector News

Semiconductor stocks have shown a substantial pullback following the rally seen in the previous session, with the Philadelphia Semiconductor Index plunging by 3.7 percent.

Considerable weakness is also visible among oil service stocks, as reflected by the 3.6 percent nosedive by the Philadelphia Oil Service Index.

Airline stocks have also shown a significant move to the downside, dragging the NYSE Arca Airline Index down by 3.4 percent.

Steel, banking and computer hardware stocks are also seeing notable weakness, while telecom stocks are among the few groups bucking the downtrend trend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. Japan's Nikkei 225 Index plunged by 2.5 percent and China's Shanghai Composite Index dipped by 0.2 percent, while South Korea's Kospi rose by 0.3 percent.

Meanwhile, European stocks have moved sharply lower on the day. While the U.K.'s FTSE 100 Index is down by 0.9 percent, the French CAC 40 Index and the German DAX Index are down by 2.0 percent and 2.1 percent, respectively.

In the bond market, treasuries have moved sharply higher amid renewed concerns about the economic outlook. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 13.3 basis points at 3.971 percent.