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Sharp Pullback By Banking Stocks Weighing On Wall Street

Following the rally seen going into the close of the previous session, stocks have pulled back sharply during trading on Friday. The major averages have all shown significant moves to the downside.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 573.67 points or 2.2 percent at 25,171.93, the Nasdaq is down 207.30 points or 2.1 percent at 9,809.70 and the S&P 500 is down 56.22 points or 1.8 percent at 3,027.54.

Banking stocks have helped to lead the way lower after showing a strong move to the upside in the previous session. Reflecting the weakness in the sector, the KBW Bank Index has plunged by 5.3 percent.

The pullback by banking stocks came after the Federal Reserve said the nation’s biggest banks are healthy but could suffer up to $700 billion in losses on soured loans if the economy languishes.

The Fed ordered certain banks to cap dividends and suspend share buybacks to conserve funds.

Banking stocks rallied on Thursday amid news U.S. regulators plan to ease banking regulations, including allowing banks to more easily make investments in riskier funds such as venture capital funds.

Significant weakness has also emerged among airline stocks, as reflected by the 4.7 nosedive by the NYSE Arca Airline Index.

Energy stocks have also come under pressure amid a decrease by the price of crude oil, while steel, brokerage and telecom stocks have also moved notably lower.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while Australia’s S&P/ASX 200 Index surged up by 1.5 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index has dipped by 0.3 percent, the French CAC 40 Index is up by 0.5 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.

In the bond market, treasuries have shown a strong move to the upside in morning trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.6 basis points at 0.648 percent.

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U.S. Stocks Move Sharply Lower As Coronavirus Concerns Resurface

Stocks moved sharply lower over the course of the trading day on Wednesday, more than offsetting the upward move seen over the two previous sessions. The tech-heavy Nasdaq pulled back well off yesterday’s record closing high.

The major averages climbed off their worst levels of the day but still posted steep losses. The Dow plummeted 710.16 points or 2.7 percent to 25,445.94, the Nasdaq tumbled 222.20 points or 2.2 percent to 9,909.17 and the S&P 500 plunged 80.96 points or 2.6 percent to 3,050.33.

The sell-off on Wall Street came as it seemed traders could no longer ignore the spiking number of new coronavirus cases in several U.S. states.

Fueling the renewed concerns, Florida and California both reported their single biggest daily increases in new cases of COVID-19.

Florida’s Department of Health confirmed 5,508 new cases on Tuesday, while the California Department of Public Health reported an additional 7,149 cases.

New York Governor Andrew Cuomo also announced that out-of-state visitors coming to New York, New Jersey and Connecticut from regions with high COVID-19 rates will be required to quarantine for 14 days.

A CNBC analysis of data compiled by Johns Hopkins University found the nation’s seven-day average of daily new Covid-19 cases spiked more than 30 percent compared with a week ago.

During congressional testimony on Tuesday, White House health advisor Dr. Anthony Fauci warned of a “disturbing surge” in coronavirus infections.

President Donald Trump has repeatedly blamed the jump in coronavirus cases on increased testing and doubled-down on his suggestion that testing should be slowed.

With the exception of the sharp pullback seen earlier this month, traders have largely shrugged off the concerns about the increase in coronavirus cases amid continued optimism about a quick economic recovery.

Sector News

Airline stocks saw substantial weakness amid concerns about the impact of the new quarantine requirements in New York, New Jersey and Connecticut, with the NYSE Arca Airline Index crashing by 7.7 percent.

Substantial weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil. Crude for August delivery plunged $2.36 to $38.01 a barrel.

Reflecting the weakness in the sector, the Philadelphia Oil Service Index plummeted by 7.9 percent, the NYSE Arca Oil Index dove by 5.8 percent and the NYSE Arca Natural Gas Index tumbled by 4.9 percent.

Banking stocks also showed a significant move to the downside over the course of the session, dragging the KBW Bank Index down by 4.8 percent.

Steel, brokerage, chemical and networking stocks also saw considerable weakness on the day, reflecting a broad-based sell-off on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index edged down by 0.1 percent, while China’s Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets all showed substantial moves to the downside on the day. While the German DAX Index plunged by 3.4 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index tumbled by 3.1 percent and 2.9 percent, respectively.

In the bond market, treasuries moved higher over the course of the session after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to 0.684 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the latest weekly jobless claims report as well as data on durable goods orders in May.

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U.S. Stocks Pull Back Off Best Levels But Close Mostly Higher, Nasdaq Sets New Record High

Stocks moved mostly higher during trading on Tuesday, extending the upward move seen over the course of the previous session. With the continued advance, the tech-heavy Nasdaq reached another new record closing high.

The major averages pulled back off their best levels in late-day trading but remained firmly positive. The Nasdaq advanced 74.89 points or 0.7 percent to 10,131.37, while the Dow climbed 131.14 points or 0.5 percent to 26,156.10 and the S&P 500 rose 13.43 points or 0.4 percent to 3,131.29.

Apple (AAPL) helped to lead the Nasdaq higher, jumping by 2.1 percent to a new record high as traders reacted positively to news out of the tech giant’s Worldwide Developers Conference.

The continued strength on Wall Street was also widely attributed to White House trade adviser Peter Navarro clarifying his remarks about the U.S.-China trade deal.

“It’s over,” Navarro said in response to a question about the trade deal in an interview on Fox News on Monday, adding that the “turning point” was China’s failure to warn the United States about the coronavirus outbreak.

However, Navarro subsequently released a statement attempting to clarify his remarks, claiming his initial comments were “taken wildly out of context.”

“They had nothing at all to do with the Phase I trade deal, which continues in place,” Navarro said. “I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”

Trump also sought to reassure investors with a post on Twitter declaring the trade deal is “fully intact” and saying he hopes China will “continue to live up to the terms of the Agreement!”

Navarro’s initial comments contributed to an overnight nosedive by stock futures but were clarified before impacting regular trading.

Stocks also benefited from upbeat economic data out of Europe, with a reading on private sector activity jumping to 47.5 in June from 31.9 in May.

A reading below 50 still indicates contraction, but Simon MacAdam, Senior Global Economist at Capital Economics, noted the readings on activity in developed markets have “come back a long way from their April lows.”

“While activity is still considerably below normal levels, the surprising speed of the recovery poses an upside risk to some of our Q2 forecasts,” MacAdam said.

In U.S. economic news, the Commerce Department released a report showing a substantial increase in new home sales in the month of May.

The report said new home sales spiked by 16.6 percent to an annual rate of 676,000 in May from a significantly downwardly revised rate of 580,000 in April.

Economists had expected new home sales to jump 2.7 percent to an annual rate of 640,000 from the 623,000 originally reported for the previous month.

Sector News

Gold stocks extended the rally seen over the two previous sessions, driving the NYSE Arca Gold Bugs Index up by 1.8 percent to its best closing level in a month.

The continued strength among gold stocks came as the price of the precious metal saw further upside, with gold for August delivery jumping $15.60 to $1,782 an ounce, the highest closing level since October 2012.

Significant strength was also visible among transportation stocks, as reflected by the 1.3 percent gain posted by the Dow Jones Transportation Average.

Steel and retail stocks also saw notable strength on the day, while some weakness emerged among networking and utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.5 percent, while Hong Kong’s Hang Seng Index surged up by 1.6 percent.

The major European markets also showed strong moves to the upside on the day. While the German DAX Index spiked by 2.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index jumped by 1.4 percent and 1.2 percent, respectively.

In the bond market, treasuries closed nearly flat for the third straight session after recovering from early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 0.709 percent.

Looking Ahead

A lack of major U.S. economic data on Wednesday may lead traders to continue to focus on the latest coronavirus and overseas news.

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U.S. Stock Futures Rebound From Overnight Slump, Pointing To Higher Open

Stock futures have shown a substantial recovery from an overnight nosedive and are currently pointing to a significantly higher open on Wall Street. The Dow futures are up by 315 points and the Nasdaq futures are up by 71 points, suggesting the tech-heavy index could reach a new record high.

The futures fell sharply overnight as comments from White House trade adviser Peter Navarro seemed to suggest President Donald Trump had decided to terminate the U.S.-China trade deal.

“It’s over,” Navarro said in response to a question about the trade deal in an interview on Fox News, adding that the “turning point” was China’s failure to warn the United States about the coronavirus outbreak.

However, Navarro subsequently released a statement attempting to clarify his remarks, claiming his initial comments were “taken wildly out of context.”

“They had nothing at all to do with the Phase I trade deal, which continues in place,” Navarro said. “I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”

Trump also sought to reassure investors with a post on Twitter declaring the trade deal is “fully intact” and saying he hopes China will “continue to live up to the terms of the Agreement!”

The futures quickly recovered from the overnight slump and have seen further upside since then, reflecting recent upward momentum on Wall Street.

Stocks may continue to benefit from optimism about a quick economic recovery, as traders seem unfazed by the rising number of coronavirus cases and hospitalizations in several states across the country.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on new home sales in the month of May.

Economists expect new home sales to jump by 2.7 percent to an annual rate of 640,000 in May after rising by 0.6 percent to a rate of 623,000 in April.

Stocks moved mostly higher over the course of the trading day on Monday after showing a lack of direction early in the session. The tech-heavy Nasdaq closed higher for the seventh straight session, reaching a new record closing high.

The major averages all finished the day firmly in positive territory. While the Nasdaq jumped 110.35 points or 1.1 percent to 10,056.47, the Dow climbed 153.50 points or 0.6 percent to 26,024.96 and the S&P 500 advanced 20.12 points or 0.7 percent to 3,117.86.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.5 percent, while Hong Kong’s Hang Seng Index surged up by 1.6 percent.

The major European markets have also shown strong moves to the upside on the day. While the German DAX Index has soared by 2.7 percent, the French CAC 40 Index is up by 1.7 percent and the U.K.’s FTSE 100 Index is up by 1.5 percent.

In commodities trading, crude oil futures are rising $0.52 to $41.25 a barrel after climbing $0.90 to $40.73 a barrel on Monday. Meanwhile, after jumping $13.40 to $1,766.40 an ounce in the previous session, gold futures are advancing $9.30 to $1,775.70 an ounce.

On the currency front, the U.S. dollar is trading at 106.61 yen compared to the 106.91 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1331 compared to yesterday’s $1.1261.

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