WASHINGTON (dpa-AFX) - Stocks have shown a significant downturn over the course of the trading session on Tuesday after failing to sustain an early move to the upside. The major averages have pulled back firmly into negative territory, offsetting yesterday's gains.
In recent trading, the major averages have seen further downside, hitting new lows for the session. The Dow is down 207.27 points or 0.8 percent at 26,709.56, the Nasdaq is down 44.07 points or 0.6 percent at 7,955.27 and the S&P 500 is down 20.54 points or 0.7 percent at 2,956.20.
The downturn by stocks came following the release of a report from the Institute for Supply Management showing a continued contraction in U.S. manufacturing activity in the month of September.
The ISM said its purchasing managers index dropped to 47.8 in September from 49.1 in August, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to inch up to 50.1.
With the unexpected decrease, the index fell to its lowest level since hitting 46.3 in June of 2009, the last month of the Great Recession.
Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted the contraction continues six straight months of softening in manufacturing.
'Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,' Fiore said. 'Overall, sentiment this month remains cautious regarding near-term growth.'
The new export orders index slid to 41.0 in September from 43.3 in August, falling to its lowest level since hitting 39.4 in March of 2009.
Economists noted the disappointing data may also reflect the ongoing strike at General Motors (GM), which has also begun to affect production at suppliers.
Meanwhile, President Donald Trump blamed the weak manufacturing data on the Federal Reserve, which he blasted as 'pathetic' in a post on Twitter.
'As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don't have a clue. Pathetic!' Trump tweeted.
Sector News
Brokerage stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Broker/Dealer Index down by 4.9 percent to its lowest intraday level in a month.
Online brokers are falling sharply after Charles Schwab (SCHW) announced plans to eliminate online trade commissions for U.S. stocks, exchange traded funds and options as part of an escalating price war.
Considerable weakness has also emerged among oil service stocks, as reflected by the 1.9 percent slump by the Philadelphia Oil Service Index.
The weakness among oil service stocks comes amid a modest decrease by the price of crude oil, with crude for November delivery slipping $0.19 to $53.88 a barrel.
Networking, banking, and chemical stocks are also seeing notable weakness, while gold stocks are rebounding following yesterday's sell-off.
After plunging by 3.5 percent on Monday, the NYSE Arca Gold Bugs Index has surged up by 2.3 percent amid a notable rebound by the price of gold.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, with markets in China and Hong Kong closed for holidays. Japan's Nikkei 225 Index climbed by 0.6 percent, while Australia's All Ordinaries Index advanced by 0.8 percent.
Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index slid by 0.7 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.3 percent and 1.4 percent, respectively.
In the bond market, treasuries have shown a significant turnaround following the weak manufacturing data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.7 basis points at 1.618 percent.
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