U.S. Stocks Off Worst Levels But Still Mostly Lower

(RTTNews) - After coming under pressure early in the session, stocks have climbed off their worst levels but remain mostly lower in afternoon trading on Wednesday. The major averages have all moved to the downside on the day, with the Dow falling to its lowest levels in almost a month.

The major averages have moved roughly sideways in recent trading, stuck firmly in negative territory. The Dow is down 369.21 points or 1.0 percent at 38,483.65, the S&P 500 is down 30.97 points or 0.6 percent at 5,275.07 and the Nasdaq is down 62.93 points or 0.4 percent at 16,956.95.

The weakness on Wall Street comes amid a continued increase by treasury yields, with the yield on the benchmark ten-year note climbing to its highest levels in nearly a month.

The ten-year yield jumped above 4.5 percent on Tuesday, as auctions of two-year and five-year notes attracted well below average demand.

The continued advance by treasury yields has added to recent concerns about the outlook for interest rates ahead of key inflation data later in the week.

On Friday, the Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Federal Reserve.

The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed's next monetary policy meeting on June 11-12.

In an interview with CNBC on Tuesday, Minneapolis Fed President Neel Kashkari said he needs to see "many more months of positive inflation data" before he would consider cutting interest rates.

Kashkari, who does not have a vote on the rate-setting Federal Open Market Committee this year, also said he could not rule out raising interest rates if inflation fails to slow.

Traders may also be cashing in on recent strength in the tech sector, which drove the Nasdaq to a new record closing high on Tuesday amid a surge by shares of Nvidia (NVDA).

Sector News

Airline stocks continue to see substantial weakness on the day, with the NYSE Arca Airline Index plunging by 2.8 percent after hitting a six-month intraday low in early trading.

America Airlines (AAL) has led the sector lower, plummeting by 14.9 percent after the airline lowered its second quarter earnings guidance.

A pullback by the price of crude oil has also led to considerable weakness among energy stocks, dragging the NYSE ARCA Oil Index and the Philadelphia Oil Service Index down by 2.2 percent and 2.0 percent, respectively.

Significant weakness also remains visible among biotechnology stocks, as reflected by the 1.6 percent loss being posted by the NYSE Arca Biotechnology Index.

Steel, housing and banking stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng Index plunged by 1.8 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index tumbled by 1.5 percent, the German DAX Index slumped by 1.1 percent and the U.K.'s FTSE 100 Index slid by 0.9 percent.

In the bond market, treasuries are extending the notable downward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.2 basis points at 4.624 percent.