Stocks Come Under Pressure Amid Reports Of Airplane Crash - US Commentary
(Alliance News Via Acquire Media NewsEdge) WASHINGTON (Alliance News) - After showing a lack of direction in early trading on Thursday, stocks have recently come under pressure amid reports that a Malaysia Airlines passenger plane has crashed in eastern Ukraine. The major averages pulled back firmly into negative territory on the news.
In recent trading, the major averages have seen further downside, falling to new lows for the session. The Dow is down 87.95 points or 0.5% at 17,050.25, the Nasdaq is down 43.89 points or 1% at 4,382.08 and the S&P 500 is down 14.81 points or 0.8% at 1,966.76.
The weakness that has emerged on Wall Street comes on the heels of an Interfax report that a Malaysia Airlines plane with 295 people on board crashed near the Ukraine-Russia border.
The report of a crash in an area where the Ukrainian government has been fighting pro-Russian rebels has led to speculation that the plane was shot down.
The news comes as the markets were already on edge due to concerns about the economic impact of new sanctions against Russia.
Citing continued attempts to destabilize Ukraine, the US imposed a broad-based package of sanctions on entities in the Russian financial services, energy, and defense sectors.
Peter Boockvar, chief market analyst at the Lindsey Group, described the sanction news as a convenient excuse to sell stocks, suggesting that the continued highs by the major averages are hiding the tenuous internals of the US stock market.
A disappointing report on new residential construction in the US is also weighing on the markets, with housing starts falling to a nine-month low.
The Commerce Department said housing starts tumbled 9.3% to an annual rate of 893,000 in June from the revised May estimate of 985,000.
The sharp drop came as a surprise to economists, who had expected housing starts to climb to 1.020 million from the 1.001 million originally reported for the previous month. Meanwhile, a separate report from the Philadelphia Federal Reserve showed a notable acceleration in the pace of growth in Philadelphia-area manufacturing activity.
The Philly Fed said its diffusion index of current general activity jumped to 23.9 in July from 17.8 in June, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to drop to a reading of 16.0.
With the unexpected monthly increase, the Philly Fed index reached its highest level since hitting 34.7 in March of 2011.
Following yesterday's rally on the heels of Intel's (INTC) upbeat earnings news, semiconductor stocks have shown a substantial move back to the downside. The Philadelphia Semiconductor Index has fallen by 2.1%, pulling back off the thirteen-year closing high set on Wednesday.
SanDisk (SNDK) has helped to lead the semiconductor sector lower, with the chipmaker tumbling by 13% after reporting better than expected second quarter earnings but providing disappointing revenue guidance.
Significant weakness has also emerged among airline stocks, which fell sharply following the news out of Ukraine. Reflecting the weakness in the sector, the NYSE Arca Airline Index is down by 1.9%.
Housing stocks have also come under pressure on the heels of the disappointing housing starts data, resulting in a 1.7% drop by the Philadelphia Housing Sector Index. With the loss, the index has fallen to its lowest intraday level in over a month.
Natural gas, steel, and oil service stocks are also seeing notable weakness, while gold stocks have shown a strong move to the upside along with the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. Japan's Nikkei 225 Index edged down by 0.1%, while Australia's All Ordinaries Index crept up by 0.1%.
Meanwhile, the major European markets all moved back to the downside following yesterday's rally. While the UK's FTSE 100 Index dropped by 0.7%, the German DAX Index and the French CAC 40 Index tumbled by 1.1% and 1.2%, respectively.
In the bond market, treasuries have seen further upside following the news out of Ukraine. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.3 basis points at 2.485%.
Copyright RTT News/dpa-AFX
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