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Stock Market Update for 11/23/2011

November 23, 2011

After moving mostly lower over the course of the previous session, stocks are seeing some further downside in early trading on Wednesday. The major averages have slid firmly into negative territory, falling to their lowest intraday levels in over a month.

The major averages have edged up off their lows for the session in the past few minutes but continue to post steep losses. The Dow is down 117.91 points or 1 percent at 11,375.81, the Nasdaq is down 27.87 points or 1.1 percent at 2,493.41 and the S&P 500 is down 13.60 points or 1.1 percent at 1,174.44.

The early weakness on Wall Street is partly due to lingering concerns about the financial situation in Europe, as weak demand for a German bond auction has contributed to a jump in European bond yields.

Peter Boockvar, equity strategist at Miller Tabak, said, “While it’s not the first time Germany has failed to sell as many bunds as they hoped, the timing and scale of today’s ten-year auction was quite disappointing.”

“Unfortunately for the rest of the region, with the German bond market being one of the only risk free securities left and seeing a rise in its yields, yields are jumping elsewhere, particularly in France,” he added.

Disappointing Chinese manufacturing data may also generate some selling pressure, with a report from HSBC showing that Chinese manufacturing activity contracted in November.

Traders are also digesting a mixed batch of U.S. economic data, including a report from the Commerce Department showing a smaller than expected drop in U.S. durable goods orders.

While durable goods orders fell by 0.7 percent in October, economists had been expecting a somewhat more substantial 1 percent drop. Excluding transportation equipment, durable goods orders actually rose by 0.7 percent.

A separate report from the Labor Department showed a modest increase in initial jobless claims in the week ended November 19th, although claims remained below the key 400,000 level.

While the Commerce Department also released a report showing stronger than expected personal income growth in October, personal spending inched up by less than expected.

Steel stocks are moving sharply lower in early trading, extending the downward move seen over the past week. Reflecting the weakness among steel stocks, the NYSE Arca Steel Index is tumbling by 2.5 percent to a one-month intraday low.

Banking, telecom, gold, and networking stocks have also come under considerable selling pressure, moving to the downside along with most of the major sectors.

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness on Wednesday, although the Japanese markets were closed for a public holiday. Hong Kong’s Hang Seng plunged by 2.1 percent, while Australia’s All Ordinaries Index tumbled by 1.9 percent.

The major European markets are also moving to the downside on the day. While the German DAX Index is just below the unchanged line, the French CAC 40 Index and the U.K.’s FTSE 100 Index are down by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries are seeing modest weakness despite the continued weakness among stocks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.1 basis points at 1.95 percent.

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