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

After moving sharply lower early in the session, stocks have seen some further downside over the course of the trading day on Friday. With the drop, the major averages continue to give back ground after ending Wednesday’s trading at their best closing levels in well over a month.

Currently, the major averages are at or near their lows of the session. The Dow is down 602.24 points or 2.5 percent at 23,743.48, the Nasdaq is down 302.22 points or 3.4 percent at 8,587.33 and the S&P 500 is down 86.20 points or 3 percent at 2,826.23.

The weakness on Wall Street partly reflects a negative reaction to earnings news from Amazon (AMZN), with the online retail giant plunging by 7.7 percent.

The steep drop by shares of Amazon comes after the company reported weaker than expected first quarter earnings.

Shares of Honeywell (HON) have also come under pressure after the conglomerate reported first quarter earnings that beat estimates but weaker than expected sales.

Tech giant Apple (AAPL) reported better than expected quarterly results but declined to provide guidance amid uncertainty about the coronavirus pandemic.

In U.S. economic news, the Institute for Supply Management released a report showing manufacturing activity continued to contract in the month of April.

The ISM said its purchasing managers index slumped to 41.5 in April from 49.1 in March, with a reading below 50 indicating a contraction in manufacturing activity.

The manufacturing index showed a notable decrease compared to the previous month but still came in above economist estimates for a reading of 36.9.

With the decline, the purchasing managers index dropped to its lowest level since hitting 39.9 in April of 2009.

Meanwhile, a separate report released by the Commerce Department showed an unexpected increase in construction spending in the month of March.

The Commerce Department said construction spending climbed by 0.9 percent to an annual rate of $1.361 trillion in March after tumbling by 2.5 percent to a revised $1.348 trillion in February.

The increase came as a surprise to economists, who had expected construction spending to plunge by 3.5 percent compared to the 1.3 percent slump originally reported for the previous month.

Sector News

Energy stocks continue to turn in some of the market’s worst performances in mid-day trading even as the price of crude oil for June delivery is climbing $0.50 to $19.34 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 7.6 percent and the NYSE Arca Oil Index is down by 6.4 percent.

Considerable weakness also remains visible among computer hardware stocks, as reflected by the 5.1 percent nosedive by the NYSE Arca Computer Hardware Index.

Disk drive maker Western Digital (WDC) has helped to lead the sector lower after reporting weaker than expected fiscal third quarter earnings.

Housing, banking and semiconductor stocks are also seeing substantial weakness on the day, while gold stocks are among the few groups bucking the downtrend.

Other Markets

In overseas trading, Japanese and Australian stocks moved sharply lower on Friday, although most major markets in the Asia-Pacific region were closed for holidays. Japan’s Nikkei 225 Index plunged by 2.8 percent, while Australia’s S&P/ASX 200 Index plummeted by 5 percent.

U.K. stocks also showed a substantial move to the downside on the day, while the other European markets were closed on the day. The U.K.’s FTSE 100 Index tumbled by 2.3 percent.

In the bond market, treasuries have shown a lack of direction over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2 basis points at 0.642 percent.

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