WASHINGTON (dpa-AFX) - Stocks have climbed well off their worst levels of the day but remain mostly negative in mid-day trading on Friday. With the drop on the day, the major averages are extending the sharp pullback seen in the previous session.
Currently, the major averages are firmly in negative territory. The Dow is down 136.98 points or 0.5 percent at 26,515.35, the Nasdaq is down 82.12 points or 0.8 percent at 10,379.30 and the S&P 500 is down 16.98 points or 0.5 percent at 3,218.68.
A sell-off by shares of Intel (INTC) is weighing on the markets, with the semiconductor giant and Dow component plunging by 15.4 percent after hitting a four-month intraday low earlier in the session.
Intel came under pressure after reporting better than expected second quarter results but warning of further delays in production of its next-generation chips.
The weakness on Wall Street also comes amid concerns about rising tensions between the U.S. and China after Beijing decided to revoke the license for the establishment and operation of the U.S. Consulate General in Chengdu.
The move comes just days after the U.S. government ordered China to close its consulate in Houston, Texas, amid accusations Chinese diplomats aided in economic espionage and the attempted theft of scientific research.
A statement from China's Foreign Ministry claimed the move by the U.S. violated international law and seriously damaged U.S.-China relations and called the closure of the U.S. consulate in Chengdu a 'legitimate and necessary response to the unreasonable actions of the United States.'
'The current situation between China and the United States is something China does not want to see, and the responsibility rests entirely with the United States,' the statement said, urging the U.S. to immediately revoke the 'erroneous decision.'
Worries about the continued spike in coronavirus cases have also generated some negative sentiment, with the U.S. reporting 68,663 new cases on Thursday, according to data compiled by Johns Hopkins University.
According to analysis by CNBC, daily new cases are rising, on average, by at least 5 percent in 25 states and the District of Columbia as of Thursday.
However, selling pressure waned following the release of a Commerce Department report showing new home sales in the U.S. continued to spike in the month of June.
The Commerce Department said new home sales soared by 13.8 percent to an annual rate of 776,000 in June after skyrocketing by 19.4 percent to a revised rate of 682,000 in May.
Economists had expected new home sales to jump 3.6 percent to a rate of 700,000 from the 676,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales continued to rebound after falling to the lowest annual rate in well over a year in April and reached their highest level since July of 2007.
Sector News
Computer hardware stocks continue to see substantial weakness in mid-day trading, resulting in a 2.5 percent nosedive by the NYSE Arca Computer Hardware Index. The index reached a five-month intraday high on Thursday before pulling back sharply.
Significant weakness also remains visible among airline stocks, as reflected by the 1.8 percent slump by the NYSE Arca Airline Index.
Biotechnology stocks have also come under pressure on the day, dragging the NYSE Arca Biotechnology Index down by 2 percent. The index continues to give back ground after reaching a record closing high on Monday.
Networking, healthcare and pharmaceutical stocks are also seeing notable weakness, while gold stocks have moved sharply higher after the price of the precious metal climbed above $1,900 an ounce.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Friday, with the Japanese markets still closed for a holiday. China's Shanghai Composite Index plummeted by 3.9 percent, while Hong Kong's Hang Seng Index sank by 2.2 percent.
The major European markets also showed significant moves to the downside on the day. While the German DAX Index tumbled by 2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index slumped by 1.5 percent and 1.4 percent, respectively.
In the bond market, treasuries are turning in a lackluster performance after trending higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is unchanged at 0.582 percent.
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