Renewed Interest Rate Uncertainty Contributing To Sell-Off On Wall Street

(RTTNews) - Stocks have moved sharply lower during trading on Tuesday, extending the pullback seen over the course of the previous session. The major averages have all shown notable moves to the downside, with the Dow and the S&P 500 pulling back further off last Thursday's record closing highs.

Currently, the major averages are off their lows of the session but still firmly negative. The Dow is down 413.36 points or 1.0 percent at 39,153.49, the Nasdaq is down 239.08 points or 1.5 percent at 16,157.75 and the S&P 500 is down 53.83 points or 1.0 percent at 5,189.94.

The sell-off on Wall Street partly reflects renewed uncertainty about the outlook for interest rates as traders digest recent U.S. economic data.

Last Friday's closely watched inflation data combined with Monday's stronger than expected manufacturing data have raised questions about whether the Federal Reserve will lower rates in June.

Treasury yields moved sharply higher in reaction to the data on Monday and have seen further upside today, with the yield on the benchmark ten-year note reaching a four-month high.

While CME Group's FedWatch Tool is currently still indicating 56.3 percent chance the Fed will cut rates by a quarter point in June, that is down from 63.8 percent a week ago.

Traders may also be taking the opportunity to cash in on recent strength in the markets ahead of remarks by Fed Chair Jerome Powell on Wednesday and the release of the monthly jobs report on Friday.

On the U.S. economic front, the Commerce Department released a report showing a significant rebound in factory orders in the month of February.

The Commerce Department said factory orders surged by 1.4 percent in February after plunging by a revised 3.8 percent in January.

Economists had expected factory orders to jump by 1.0 percent compared to the 3.6 percent slump originally reported for the previous month.

Sector News

Airline stocks are extending the notable downward move seen on Monday, resulting in a 2.8 percent nosedive by the NYSE Arca Airline Index.

Substantial weakness has also emerged among housing stocks, with the Philadelphia Housing Sector Index tumbling by 2.7 percent. The index is pulling back further off last Thursday's record closing high.

Networking stocks are also seeing considerable weakness on the day, as reflected by the 2.5 percent slump by the NYSE Arca Networking Index.

Semiconductor, computer hardware and healthcare stocks have also shown significant moves to the downside, while oil service stocks are among the few groups bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. China's Shanghai Composite Index edged down by 0.1 percent, while Japan's Nikkei 225 Index inched up by 0.1 percent and Hong Kong's Hang Seng Index surged by 2.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has slumped by 1.0 percent, the French CAC 40 Index is down by 0.9 percent and the U.K.'s FTSE 100 Index is down by 0.1 percent.

In the bond market, treasuries are extending the sell-off seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.4 basis points at 4.373 percent.