U.S. Stocks Move Sharply Lower Amid Lingering Economic Worries

Stocks have moved sharply lower in morning trading on Thursday, with the major averages all showing substantial moves to the downside after ending the previous session narrowly mixed. The S&P 500 is on track for its worst first half in over 50 years.

The major averages have climbed off their worst levels in recent trading but continue to post steep losses. The Dow is down 364.42 points or 1.2 percent at 30,664.89, the Nasdaq is down 199.76 points or 1.8 percent at 10,978.13 and the S&P 500 is down 48.34 points or 1.2 percent at 3,770.49.

The sell-off on Wall Street comes amid lingering concerns about the global economic outlook and the possibility of a recession.

Central bank chiefs have recently reaffirmed their resolve to bring down inflation despite threats to economic growth.

A report from the Commerce Department provided further evidence of an economic slowdown, showing personal spending increased by less than expected in the month of May.

The Commerce Department personal spending edged up by 0.2 percent in May after climbing by a downwardly revised 0.6 percent in April.

Economists had expected personal spending to increase by 0.5 percent compared to the 0.9 percent advance originally reported for the previous month.

Real personal spending, which excludes price changes, fell by 0.4 percent in May after rising by 0.3 percent in April.

“The larger than expected 0.4% fall in real consumption in May, together with downward revisions to gains in previous months, means we now expect consumption to rise by just 0.8% annualized in the second quarter, down sharply from our previous estimate of close to 3.0%,” said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, “As a result, second quarter GDP growth is now on track to be closer to 1.0% annualized, down from our previous estimate of 2.7%, and we expect growth to remain below trend over the second half of the year too.”

While the report also showed a slowdown in the annual rate of core consumer price growth, Pearce said the data does not present the “clear and compelling” evidence the Federal Reserve needs to shift to less aggressive rate hikes.

Reflecting concerns about the global economy, steel stocks are turning in some of the market’s worst performances on the day. The NYSE Arca Steel Index has plummeted by 3.5 percent to its lowest intraday level in well over a year.

Substantial weakness is also visible among gold stocks, as reflected by the 3.4 percent nosedive by the NYSE Arca Gold Bugs Index.

The index has tumbled to its lowest intraday level in over two years as the price of gold for August delivery slips $6.70 to $1,810.80 an ounce.

Airline stocks have moved sharply lower on the day, resulting in a 2.9 percent slump by the NYSE Arca Airline Index.

Financial, retail and oil service stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index slumped by 1.5 percent, while China’s Shanghai Composite Index jumped by 1.1 percent.

Meanwhile, the major European markets have all moved sharply lower on the day. The U.K.’s FTSE 100 Index, the French CAC 40 Index and the German DAX Index have all plunged by 2.3 percent.

In the bond market, treasuries are extending the strong upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8.7 basis points at 3.006 percent.

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