Retail Stocks Lead Sharp Pullback On Wall Street

After showing a strong upward move in the previous session, stocks showed a substantial move back to the downside during trading on Wednesday. With the steep drop on the day, the Dow and the S&P 500 ended the session at their lowest closing levels in over a year.

The major averages saw continued weakness late in the session, ending the day near their worst levels. The Dow plunged 1,164.52 points or 3.6 percent to 31,490.07, the Nasdaq plummeted 566.37 points or 4.7 percent to 11,418.15 and the S&P 500 tumbled 165.17 points or 4 percent to 3,923.68.

Retail stocks helped lead the markets lower on the day, with the Dow Jones U.S. Retail Index plunging by 7.7 percent to its lowest closing level in almost two years.

Target (TGT) posted a particularly steep loss after the discount retailer reported quarterly earnings that missed analyst estimates.

Substantial weakness was also visible among transportation stocks, as reflected by the 7.4 percent nosedive by the Dow Jones Transportation Average.

Housing stocks also saw significant weakness on the day, dragging the Philadelphia Housing Sector Index down by 4.6 percent.

Semiconductor, computer hardware, brokerage and steel stocks also showed notable moves to the downside amid broad based weakness on Wall Street.

On the U.S. economic front, a report released by the Commerce Department showed a modest decrease in new residential construction in the month of April.

The Commerce Department said housing starts edged down by 0.2 percent to an annual rate of 1.724 million from a revised rate of 1.728 million in March.

The slight drop in housing starts came as single-family housing starts plunged by 7.3 percent to an annual rate of 1.100 million.

Meanwhile, the report showed building permits, an indicator of future housing demand, tumbled by 3.2 percent to an annual rate of 1.819 million from a revised rate of 1.879 million in March.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while China’s Shanghai Composite Index fell by 0.3 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index tumbled by 1.3 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index slumped by 1.2 percent and 1.1 percent, respectively.

In the bond market, treasuries showed a notable turnaround after an initial move lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.2 basis points to 2.886 percent.

Looking ahead, trading on Thursday may be impacted by reaction to reports on initial jobless claims, existing home sales and leading economic indicators.

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