With traders reacting negatively to some troubling news from overseas, stocks moved sharply lower at the start of trading on Monday. The major averages fell firmly into negative territory but have not seen much follow-through on the initial downward move.
Currently, the major averages are posting sharp losses, just off their lows for the young session. The Dow is down 141.83 points or 1.1 percent at 12,887.43, the Nasdaq is down 36.12 points or 1.2 percent at 2,964.33 and the S&P 500 is down 15.83 points or 1.2 percent at 1,362.70.
Disappointing economic data from overseas contributed to the initial weakness on Wall Street, with a report from HSBC Holdings and Markit Economics showing a continued contraction in Chinese manufacturing activity in the month of April.
While the manufacturing purchasing managers' index for China climbed to 49.1 in April from 48.3 in March, a reading below 50 indicates a contraction.
A separate report from Markit showed that its index of private sector activity in the Eurozone dropped to a five-month low of 47.4 in April from 49.1 in March.
Markit Chief Economist Chris Williamson said, "The flash PMI signaled a faster rate of economic contraction in the Eurozone during April, extending what appears to be a double-dip recession into a third consecutive quarter."
Traders have also reacted negatively to news that French President Nicolas Sarkozy came in second in a first round of voting, losing to socialist Francois Hollande.
Sarkozy is expected to face an uphill battle in a run-off election against Hollande on May 6th, raising concerns about a setback to efforts to diffuse the European debt crisis.
Steel stocks are posting particularly steep losses amid concerns about the outlook for the global economy. Reflecting the weakness in the sector, the NYSE Arca Steel Index has tumbled by 3 percent.
Considerable weakness is also visible among gold stocks, which are moving lower along with the price of the precious metal. Brokerage, airline, and oil service stocks are also seeing significant weakness, moving lower along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved to the downside during trading on Monday. Japan's Nikkei 225 Index edged down by 0.2 percent, while Hong Kong's Hang Seng Index tumbled by 1.8 percent.
The major European markets have also come under considerable selling pressure. While the U.K.'s FTSE 100 Index is down by 1.9 percent, the French CAC 40 Index is down by 2.5 percent, and the German DAX Index is down by 3.1 percent.
In the bond market, treasuries have shown a strong upward move amid the global economic concerns. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.6 basis points at 1.924 percent.
by RTT Staff Writer
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