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Stocks See Initial Weakness But Selling Pressure Subdued - U.S. Commentary

While stocks moved lower at the start of trading on Monday, selling pressure waned not long after the open. The major averages have subsequently bounced off their early lows, with the Nasdaq and the S&P 500 climbing back near the unchanged line.

The Nasdaq and the S&P 500 briefly turned positive, but the major averages are currently all in the red. The Dow is down 35.04 points or 0.3 percent at 13,003.23, the Nasdaq is down 1.33 points or less than 0.1 percent at 2,955.01 and the S&P 500 is down 0.79 points or 0.1 percent at 1,368.31.

The initial weakness on Wall Street reflected a negative reaction to election results in France and Greece, which some consider a setback to the progress achieved thus far on the European debt crisis.

Francois Hollande won a run-off election against French President Nicolas Sarkozy and will become France's first Socialist president since 1995.

Hollande has expressed significant opposition to using austerity measures to address the European debt crisis, arguing that the focus should be more on economic growth than cutting government spending.

Additionally, the results of Greek elections pointed to a hung parliament, with no single party getting adequate votes to form a government. Many Greek voters turned to anti-bailout parties.

The focus on the developments in Europe comes amid a light day on the U.S. economic front, although the Federal Reserve is scheduled to release its monthly consumer credit report later this afternoon.

Most of the major sectors are showing only modest moves, contributing to the lackluster performance by the broader markets. While some weakness is visible among oil service stocks, banking stocks are seeing notable strength.

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 2.8 percent, while Hong Kong's Hang Seng Index plummeted by 2.6 percent.

Meanwhile, the major European markets have turned mixed on the day, with the U.K. markets closed for a holiday. While the French CAC 40 Index is up by 0.8 percent, the German DAX Index is down by 0.2 percent.

In the bond market, treasuries are seeing modest strength but have pulled back off their best levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1 basis point at 1.87 percent after hitting a low of 1.861 percent.

by RTTNews Staff Writer

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