Stocks Move Mostly Lower Following Disappointing Economic Data - U.S. Commentary

(RTTNews) - Stocks have moved mostly lower over the course of the trading day on Friday, extending the downward trend seen over the past few sessions. With the drop on the day, the Dow is pulling back toward the five-month lows set earlier this month.

The major averages have seen some further downside in recent trading, hitting new lows for the session. The Dow is down 91.40 points or 0.5 percent at 17,640.52, the Nasdaq is down 11.18 points or 0.2 percent at 5,135.23 and the S&P 500 is down 9.58 points or 0.5 percent at 2,092.57.

The continued weakness on Wall Street partly reflects a negative reaction to 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."

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

Sector News

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.

Cliffs Natural Resources (CLF) and AK Steel (AKS) are turning in two of the steel sector's worst performances in mid-day trading.

Energy stocks have also come under pressure amid a modest decrease by the price of crude oil. Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index are down by 1.9 percent and 1.7 percent, respectively.

Significant weakness is also visible among gold stocks, as reflected by the 1.7 percent loss being posted by the NYSE Arca Gold Bugs Index. The weakness in the sector comes as gold for August delivery is sliding $9.60 to $1,084.50 an ounce.

Biotechnology, chemical, health care and housing stocks are also seeing notable weakness, while some networking, internet and railroad stocks are posting strong gains.

Other Markets

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

The major European markets also moved lower on the day. While the French CAC 40 Index fell by 0.6 percent, the U.K.'s FTSE 100 Index and the German DAX Index slumped by 1.1 percent and 1.4 percent, respectively.

In the bond market, treasuries have moved slightly higher amid the continued weakness on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.1 basis points at 2.266 percent.