Major Averages Pull Back Firmly Into Negative Territory - U.S. Commentary

(RTTNews) - Reflecting light trading amid the Columbus Day holiday, stocks have seen substantial volatility over the course of the trading day on Monday. The major averages have shown wild swings and slid firmly into negative territory in recent trading.

Currently, the major averages are all in the red, although the Nasdaq is underperforming its counterparts. While the Nasdaq is down 101.30 points or 1.3 percent at 7,687.14, the Dow is down 183.59 points or 0.7 percent at 26,263.46 and the S&P 500 is down 19.30 points or 0.7 percent at 2,866.27.

The weakness currently seen on Wall Street is partly to the sell-off seen in the overseas markets, with Chinese stocks showing a particularly steep drop following a week-long holiday.

The sell-off in China came as investors brushed aside a move by the People's Bank of China to cut the reserve requirements for banks in order to lower financing costs and spur growth amid the trade war with the U.S.

Lingering concerns about the outlook for interest rates are also weighing on stocks following the recent advance by treasury yields.

The yield on the ten-year note climbed to its highest closing level in over seven years last Friday on the heels of the release of the monthly jobs report.

Trading activity has remained relatively subdued, however, with many traders away from their desks due to the Columbus Day holiday.

While the stock markets are open for trading, banks, federal offices, and the bond markets are all closed on the day.

The holiday has also led to a lack of U.S. economic data, although reports on producer and consumer prices are likely to attract attention in the coming days along with speeches by several Federal Reserve officials.

Sector News

Biotechnology stocks have shown a significant move to the downside over the course of the session, resulting in a 2.2 percent slump by the NYSE Arca Biotechnology Index. The index is extending the pullback seen over the past several sessions.

Considerable weakness also remains visible among gold stocks, as reflected by the 2.1 percent drop by the NYSE Arca Gold Bugs Index.

The weakness in the gold sector comes amid a sharp decrease by the price of the precious metal, as gold for December delivery is tumbling $16.20 to $1,189.40 an ounce.

Computer hardware, networking, and semiconductor stocks have also come under pressure, contributing to the steep drop by the tech-heavy Nasdaq.

On the other hand, tobacco stocks are showing a substantial move to the upside on the day, driving the NYSE Arca Tobacco Index up by 7.3 percent to a record intraday high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw significant weakness during trading on Monday, although the Japanese markets were closed for a holiday. China's Shanghai Composite Index plummeted by 3.7 percent, while Hong Kong's Hang Seng Index tumbled by 1.4 percent.

The major European markets also showed significant moves to the downside on the day. While the German DAX Index plunged by 1.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index slumped by 1.2 percent and 1.1 percent, respectively.

Meanwhile, the bond markets are closed for the Columbus Day holiday following the weakness seen among treasuries over the past few sessions.
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