WASHINGTON (dpa-AFX) - Following the rebound seen in the previous session, stocks showed a significant move back to the downside in early trading on Wednesday. The major averages largely offset yesterday's gains, with the Dow hitting its lowest intraday level in two months.
In recent trading, the major averages have climbed well off their worst levels but remain negative. The Dow is down 330.60 points or 1.3 percent at 25,698.92, the Nasdaq is down 33.45 points or 0.4 percent at 7,799.82 and the S&P 500 is down 25.09 points or 0.9 percent at 2,856.68.
The pullback on Wall Street comes as the escalating U.S.-China trade war has investors paying close attention to daily developments on the currency front.
The People's Bank of China set the midpoint for onshore yuan trading at 6.9996 per dollar, slightly stronger than the key 7.00 per dollar level but 0.4 percent weaker than 6.9683 on Tuesday.
The Chinese central bank setting the midpoint for the Chinese currency at a stronger than expected level contributed yesterday's rally.
Negative sentiment has also been generated in reaction to disappointing earnings from Disney (DIS), with the entertainment giant slumping by 5.1 percent.
After the close of trading on Tuesday, Disney reported fiscal third quarter results that missed analyst estimates on both the top and bottom lines.
Trades are also digesting aggressive interest rate cuts by central banks in India, New Zealand and Thailand amid concerns about the global impact of the U.S.-China trade war.
Citing the overseas rate cuts, President Donald Trump claimed in a series of posts on Twitter that the problem is 'not China' but rather a Federal Reserve that is 'too proud to admit their mistake of acting too fast and tightening too much (and that I was right!)'
'They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW,' Trump tweeted. 'Yield curve is at too wide a margin, and no inflation!'
'Incompetence is a terrible thing to watch, especially when things could be taken care of sooo easily,' he added. 'We will WIN anyway, but it would be much easier if the Fed understood, which they don't, that we are competing against other countries, all of whom want to do well at our expense!'
Oil service stocks are extending the sell-off seen over the past few sessions, dragging the Philadelphia Oil Service Index down by 4.5 percent to its lowest level in nearly eighteen years.
The continued weakness among oil service stocks comes amid another steep drop by the price of crude oil, as crude for September delivery is tumbling $1.65 to $51.98 a barrel.
Substantial weakness has also emerged among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index plummeting by 3.4 percent and 3 percent, respectively.
Natural gas, steel, and telecom stocks are also seeing considerable weakness, while gold stocks are bucking the downtrend amid a continued spike in the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.3 percent, while Hong Kong's Hang Seng Index inched up by 0.1 percent.
Meanwhile, the major European markets have pulled back off their best levels but remain positive. While the U.K.'s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index is up by 0.4 percent and the German DAX Index is up by 0.6 percent.
In the bond market, treasuries have resumed their recent rally after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.2 basis points at 1.627 percent.
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