Stocks Extend Yesterday's Sell-Off In Early Trading - U.S. Commentary

(RTTNews) - Stocks have moved sharply lower in early trading on Friday, extending the sell-off that was seen in the previous session. With the steep drop on the day, all three major averages have fallen to new multi-month intraday lows.

Currently, the major averages are posting steep losses, near their lows for the young session. The Dow is down 215.26 points or 1.3 percent at 16,775.43, the Nasdaq is down 79.72 points or 1.6 percent at 4,797.77 and the S&P 500 is down 26.53 points or 1.3 percent at 2,009.20.

The continued weakness on Wall Street partly reflects the recent downward momentum for the markets, which comes amid overarching concerns about developing economies and the outlook for U.S. interest rates.

Adding to the worries, the Chinese markets showed another steep decline overnight, with the Shanghai Composite Index plunging by 4.3 percent.

The weakness among Chinese stocks came as a report from Markit and Caixin showed that manufacturing activity in China slid to a six-year low in August.

The report said the preliminary reading on Chinese manufacturing activity dropped to 47.1 in August from 47.8 in July.

Markit also released a separate report showing that its preliminary reading on U.S. manufacturing activity came in at 52.9 in August compared to the final July reading of 53.8.

Overall trading activity has remained somewhat subdued on a summer Friday, however, potentially exaggerating the downward move by the markets.

Most of the major sectors have shown significant moves to the downside on the day, reflecting broad based selling pressure.

Gold stocks are posting particularly steep losses, resulting in a 2.4 percent drop by the NYSE Arca Gold Bugs Index. The weakness among gold stocks comes even though the price of the precious metal is roughly flat.

Energy, airline, internet, and consumer discretionary stocks are also seeing notable weakness, while some electronic storage stocks are bucking the downtrend.

In overseas trading, stock markets across the Asia-Pacific region saw substantial weakness following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index dove by 3 percent, while Hong Kong's Hang Seng Index slumped by 1.5 percent.

The major European markets have also moved sharply lower on the day. While the German DAX Index has tumbled by 1.7 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 2 percent.

In the bond market, treasuries are seeing modest strength amid the continued weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.3 basis points at 2.071 percent.