Stocks Move Notably Lower On Disappointing Economic Data - U.S. Commentary

(RTTNews) - After turning higher over the course of the previous session, stocks have shown a notable move back to the downside during trading on Friday. The major averages have slid firmly into negative territory, with the Nasdaq and the S&P 500 pulling back off their best closing levels of 2016.

In recent trading, the major averages have climbed off their worst levels, but they remain in the red. The Dow is down 108.82 points or 0.6 percent at 17,729.74, the Nasdaq is down 44.97 points or 0.9 percent at 4,926.39 and the S&P 500 is down 15.60 points or 0.7 percent at 2,089.66.

The weakness on Wall Street comes following the release of some disappointing U.S. economic data, including a much weaker than expected monthly jobs report.

Before the start of trading, the Labor Department released a report showing employment edged up by just 38,000 jobs in May compared to economist estimates for an increase of about 158,000 jobs.

The much weaker than expected job growth in May reflected the smallest increase in employment since September of 2010.

The job gains in March and April were also downwardly revised to 186,000 and 123,000, respectively, reflecting a net downward revision of 59,000 jobs.

While the weak job growth partly reflected a recent strike by Verizon (VZ) workers, the data has still raised some concerns about the economy.

A separate report from the Institute for Supply Management showed that growth in service sector activity slowed by much more than expected in May.

The ISM said its non-manufacturing index fell by 2.8 points to 52.9 in May after climbing by 1.2 points to 55.7 in April.

While a reading above 50 continues to indicate growth in the service sector, economists had expected the index to show a more modest drop to 55.5.

Analysts have suggested the data eliminates the possibility the Federal Reserve will raise interest rates this month and could delay any rate hike until at least September.

Reflecting the concerns about the economy, financial stocks have shown a substantial move to the downside in morning trading.

The Dow Jones Banks Index has plummeted by 3.7 percent, while the NYSE Arca Broker/Dealer Index has tumbled by 3.1 percent.

Biotechnology, internet, and transportation stocks are also seeing notable weakness, while gold stocks have moved sharply higher along with the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index and China's Shanghai Composite Index both advanced by 0.5 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has edged down by 0.2 percent, the French CAC 40 Index and the German DAX Index are both slumping by 1.5 percent.

In the bond market, treasuries have spiked higher on the heels of the disappointing economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, has tumbled by 9.8 basis points to 1.713 percent.