Stocks showed a lack of direction in early trading on Wednesday but moved sharply lower over the course of the session. With the steep drop on the day, the tech-heavy Nasdaq ended the session at its lowest closing level in over two years.
The major averages finished the session just off their worst levels of the day. While the Nasdaq plunged 139.94 points or 1.4 percent to 10,213.29, the S&P 500 dove 46.03 points or 1.2 percent to 3,783.22 and the Dow tumbled 365.85 points or 1.1 percent to 32,875.71.
The weakness that emerged on Wall Street partly reflected ongoing concerns about the economic outlook and the possibility of higher interest rates leading to a recession.
The Federal Reserve’s next monetary policy meeting is a month away, but traders may get some insight into the outlook for rates with the release of the minutes of the central bank’s December meeting next Wednesday.
However, with many traders away from their desks amid the holidays, the sell-off on Wall Street may have been exaggerated by below average volume.
Following the long Christmas weekend, the markets are set for another break this weekend due to New Year’s Day.
Traders may also be looking ahead to next week’s closely watched monthly jobs report, which could shed additional light on the outlook for interest rates and the economy.
On the economic front, a report released by the National Association of Realtors unexpectedly showed a continued slump in U.S. pending home sales in the month of November.
NAR said its pending home sales index tumbled by 4.0 percent to 73.9 in November after plunging by 4.7 percent to a revised 77.0 in October.
The extended nosedive came as a surprise to economists, who had expected pending home sales to increase by 0.6 percent.
Sector News
Tobacco stocks moved sharply lower over the course of the session, resulting in a 3.3 percent nosedive by the NYSE Arca Tobacco Index.
Significant weakness was also visible among gold stocks, as reflected by the 3.2 percent slump by the NYSE Arca Gold Bugs Index.
The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for February delivery falling $7.30 to $1,815.80 an ounce.
Energy stocks also saw considerable weakness amid a decrease by the price of crude oil, moving notably lower along with airline, housing and steel stocks.
