Stocks Close Sharply Lower Amid Tech Sector Sell-Off - U.S. Commentary

(RTTNews) - Stocks moved sharply lower over the course of the trading day on Wednesday, adding to the losses posted in the previous session. The pullback dragged the major averages below the levels seen before last week's Federal Reserve-inspired rally.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow tumbled 292.60 points or 1.6 percent to 17,718.54, the Nasdaq plunged 118.21 points or 2.4 percent to 4,876.52 and the S&P 500 slumped 30.45 points or 1.5 percent to 2,061.05.

The sell-off on Wall Street was led by technology stocks, as reflected by the particularly steep loss posted by the tech-heavy Nasdaq.

Negative sentiment was generated by analyst comments raising concerns about weak demand for desktop computer processors and currency headwinds.

Semiconductor stocks subsequently turned in some of the tech sector's worst performances, dragging the Philadelphia Semiconductor Index down by 4.6 percent. With the drop, the index fell to its lowest closing level in well over a month.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 4.4 percent loss posted by the NYSE Arca Biotechnology Index. The drop pulled the index down further off the record intraday high that it set last Friday.

Reflecting the weakness in the tech sector, software, internet, and networking stocks also saw significant weakness on the day.

Most of the other major sectors also came under pressure, with airline, telecom, and brokerage stocks showing notable moves to the downside.

However, energy stocks bucked the downtrend amid a significant increase by the price of crude oil. Crude for May delivery jumped $1.70 to $49.21 a barrel.

On the economic front, the Commerce Department released a report before the start of trading showing an unexpected drop in durable goods orders in the month of February.

The report said durable goods orders fell by 1.4 percent in February following a downwardly revised 2.0 percent increase in January. The drop came as a surprise to economists, who had expected orders to climb by 0.7 percent.

Excluding a 3.5 percent decrease in orders for transportation equipment, durable goods orders still fell by 0.4 percent in February.

The report also showed a 1.4 percent drop in orders for non-defense capital goods excluding aircraft, an indicator of capital spending.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Wednesday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index slid by 0.8 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.2 percent and 1.3 percent, respectively.

In the bond market, treasuries gave back some ground after trending higher over the past few weeks. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 1.92 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the Labor Department's weekly jobless claims report along with remarks by Atlanta Fed President Dennis Lockhart.