Interest Rate Concerns Weighing Heavily On Wall Street - U.S. Commentary

(RTTNews) - Partly reflecting renewed concerns about the outlook for interest rates, stocks have come under pressure in early trading on Friday. The major averages have slid firmly into negative territory, adding to the modest losses posted in the previous session.

Currently, the major averages are just off their lows for the young session. The Dow 188.60 points or 1 percent at 18,291.31, the Nasdaq is down 52.92 points or 1 percent at 5,206.56 and the S&P 500 is down 25.78 points or 1.2 percent at 2,155.52.

The early weakness on Wall Street comes as remarks by Boston Federal Reserve President Eric Rosengren have led to renewed worries about a near-term interest rate hike.

In a speech to the South Shore Chamber of Commerce in Quincy, Massachusetts, Rosengren said gradual tightening of monetary policy is likely to be appropriate to ensure the U.S. economy remains at the full employment level it is now approaching.

Rosengren added that "a failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery."

Meanwhile, Fed Governor Daniel Tarullo told CNBC a rate hike this year is possible but said he wants to see more evidence of sustained inflation before considering an increase.

The Fed is scheduled to hold its next monetary policy meeting in about two weeks, with two subsequent meetings scheduled for November and December.

Geopolitical concerns may also be weighing on the markets following North Korea's claim that it successfully tested a miniaturized nuclear warhead.

While North Korea argued the test would provide protection against "threats and sanctions" by U.S.-led hostile forces, China's state-run Xinhua news agency warned the communist nation that it will not benefit from war and instability in Northeast Asia.

Most of the major sectors have moved to the downside in early trading, with substantial weakness visible among steel stocks. Reflecting the weakness in the sector, the NYSE Arca Steel Index is down by 3.4 percent.

Interest rate-sensitive utilities and commercial real estate stocks are also under considerable selling pressure along with gold, energy, and housing stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Friday. Japan's Nikkei 225 Index closed slightly higher and Hong Kong's Hang Seng Index advanced by 0.8 percent, while China's Shanghai Composite Index fell by 0.6 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has slumped by 1.3 percent, the French CAC 40 Index and the German DAX Index are down by 0.9 percent and 0.8 percent, respectively.

In the bond market, treasuries are extending the notable decline seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.7 basis points at 1.673 percent.