US stocks traded lower weighed down by mixed trading data that added to US economic growth concerns and jitters that Greece would not be able to resolve its debt crisis.
A report by the Commerce Department earlier in the day showed that the US trade deficit had widened in March to its highest in more than six and a half years fueled by a growth in imports after industrial activity resumed in West Coast after the resolution of a labor dispute.
An increase in the trade deficit means that the US economy contracted during the January-March quarter when the US Commerce Department issues its revisions later in May.
Economists expect the GDP reading to go down from a meager 0.2% to negative territory during the revision.
“Everyone is now keeping an eye on Friday’s jobs numbers to see if last month’s dismal numbers were a momentary blip or for real,” Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh, told Reuters.
The Dow Jones Industrial Average most recently slipped 121.41 points or 0.67% to 17,949.99 points.
Dow Component Disney gained more than 0.5% to $111.64 after its first quarter revenue topped expectations.
The S&P 500 index fell 16 points or 0.8% to 2,097 with around nine of its ten key sectors trading in the negative. Technology stocks and utilities led the losses.
The technology heavy Nasdaq Composite fell by 76 points or 1.54 points to 4952.96 driven by major losses in biotech and technology shares.
“Over the past several years, ‘buy the dip’ strategy worked very well, but it seems investors now turned to ‘sell the strength’ mentality. We can see that from the market’s inability to follow through on the rallies,” Jeff Clark, trading analyst at Stansberry Research, told Market watch
“There is more downside momentum, which usually precedes a correction. Markets are overdue for a correction and this one is going to be a harsh one. I would not be surprised to see a 15%-20% drawdown,” Clark noted.
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