North Korean Nuke Test Leads To Weakness On Wall Street - U.S. Commentary

(RTTNews) - Reflecting mounting geopolitical concerns, stocks moved sharply lower at the start of trading on Wednesday. The major averages have regained some ground since the open but remain firmly negative in early trading.

Currently, the major averages are off their worst levels but still posting steep losses. The Dow is down 207.64 points or 1.2 percent at 16,951.02, the Nasdaq is down 44.94 points or 0.9 percent at 4,846.49 and the S&P 500 is down 22.59 points or 1.1 percent at 1,994.12.

The initial weakness on Wall Street largely reflected a negative reaction to North Korea's claim that it has successfully performed the republic's first hydrogen bomb test.

North Korean state television said the test of the miniaturized device shows the communist nation has joined the ranks of advanced nuclear states.

The news has added to recent geopolitical concerns amid rising tensions between Saudi Arabia and Iran and the ongoing fight against the terrorist group known as ISIS.

Subsequently, traders have largely shrugged off a slew of U.S. economic data, including a report from payroll processor ADP showing stronger than expected private sector job growth in December.

ADP said private sector employment jumped by 257,000 jobs in December after climbing by a revised 211,000 jobs in November. Economists had expected employment to increase by about 190,000 jobs.

The bigger than expected increase in private sector employment reflected the strongest job growth since employment jumped by 275,000 jobs in December of 2014.

Meanwhile, the Institute for Supply Management released a separate report showing an unexpected drop by its index of service sector activity, with the decrease reflecting faster deliveries.

The ISM said its non-manufacturing index edged down to 55.3 in December from 55.9 in November, although a reading above 50 continues to point to growth in the service sector.

The modest decrease came as a surprise to economists, who had expected the non-manufacturing index to inch up to 56.2.

Separate reports released by the Commerce Department showed a modest pullback in factory orders and a narrower trader deficit in the month of November.

Energy stocks are seeing considerable weakness in early trading, once again moving lower along with the price of crude oil. Crude for February delivery is tumbling $1.06 to $34.91 a barrel.

Significant weakness is also visible among steel, railroad, chemical, and semiconductor stocks, while gold stocks are bucking the downtrend amid an increase by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both slumped by 1 percent, while China's Shanghai Composite Index bucked the downtrend with a 2.3 percent jump.

The major European markets have shown significant moves to the downside on the day. While the French CAC 40 Index has tumbled by 1.5 percent, the U.K.'s FTSE 100 Index and the German DAX Index are down by 1.2 percent and 1 percent, respectively.

In the bond market, treasuries have moved notably higher amid the worries about global security. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.6 basis points at 2.202 percent.