Stocks Extending Recent Downward Trend In Early Trading - U.S. Commentary

(RTTNews) - After opening roughly flat, stocks have once again moved lower over the course of early trading on Friday. The major averages have slid into negative territory, adding to the losses posted in the three previous sessions.

Currently, the major averages are posting modest losses, near their lows for the young session. The Dow is down 59.93 points or 0.3 percent at 17,671.99, the Nasdaq is down 8.63 points or 0.2 percent at 5,137.78 and the S&P 500 is down 7.66 points or 0.4 percent at 2,094.49.

Negative sentiment was generated by a report from the Commerce Department showing an unexpected drop in new home sales in the month of June.

The report said new home sales tumbled 6.8 percent to an annual rate of 482,000 in June from the downwardly revised May rate of 517,000.

The steep drop came as a surprise to economists, who had expected new home sales to edge up to 550,000 from the 546,000 originally reported for the previous month.

Traders are also digesting the results of a survey by Markit and Caixin showing that Chinese manufacturing activity fell to a fifteen-month low in July.

The index of Chinese manufacturing activity slid to 48.2 in July from 49.4 in June, while economists expected a reading of 49.7. A reading below 50 indicates a contraction in activity.

Julian Evans-Pritchard, China Economist at Capital Economics, said, "Today's PMI reading suggests that recent improvements in economic momentum may have been derailed this month by weaker foreign demand."

Reflecting concerns about the outlook for Chinese demand, steel stocks have shown a significant move to the downside on the day. The NYSE Arca Steel Index has fallen by 2.5 percent to its lowest intraday level in well over six years.

Considerable weakness has also emerged among gold stocks, as reflected by the 2.3 percent loss being posted by the NYSE Arca Gold Bugs Index. The weakness in the sector comes as gold for August delivery is falling $12.30 to $1,081.80 an ounce.

Natural gas, airline, biotechnology, and housing stocks have also come under pressure, while strength among networking, internet and telecom stocks has helped to limit the downside for the markets.

Among individual stocks, shares of TrueCar (TRUE) have moved sharply lower on the day after the online auto shopping site said its second quarter loss may widen to as much as $15.5 million cut its full year forecast.

Biotechnology company Biogen (BIIB) has also come under pressure after reporting weaker than expected second quarter revenues and lowering its full-year guidance.

On the other hand, shares of Amazon (AMZN) have spiked higher after the online retailer reported an unexpected second quarter profit. The company also provided upbeat guidance for the third quarter.

In overseas trading, stock markets across the Asia-Pacific region moved the downside during trading on Friday. Japan's Nikkei 225 Index slumped by 0.7 percent, while Hong Kong's Hang Seng Index tumbled by 1.1 percent.

The major European markets have also moved lower on the day. While the German DAX Index has fallen by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are down by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries are showing a lack of direction after trending higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.271 percent.