After moving sharply lower at the open, stocks continue to see substantial weakness in mid-day trading on Monday. Lingering concerns about the ongoing European debt crisis are weighing on the markets amid worries about the impact on the global economy.
The major averages are currently posting steep losses, just off their worst levels of the day. The Dow is down 165.59 points or 1.3 percent at 12,475.19, the Nasdaq is down 59.32 points or 2.1 percent at 2,833.10 and the S&P 500 is down 24.04 points or 1.8 percent at 1,310.98.
The sell-off on Wall Street comes as traders are keeping a close eye on the latest developments in Europe, where Spain formally asked for a bailout to shore up its ailing banking sector.
Europe is likely to remain in focus throughout the week, as European leaders are due to hold a summit to discuss the ongoing debt crisis on Thursday and Friday.
Peter Boockvar, managing director at Miller Tabak, said, "With Germany just not giving in to the requests for largesse that the rest of Europe wants them to disperse in the form of socializing debt obligations in the Euro region, nothing of substance will come out of the Thurs/Fri EU summit and markets today are realizing that."
"Without German allowance money, pressure will then build on the ECB to print money to the obvious dismay of the Germans," he added.
Meanwhile, traders have largely shrugged off a report from the Commerce Department showing a bigger than expected increase in U.S. new home sales.
The report showed sales of new single-family homes at a seasonally adjusted annual rate of 369,000 in May, a 7.6 percent increase from the revised April rate of 343,000. Economists had expected new home sales to climb to 350,000.
With the bigger than expected increase, new home sales came in at their strongest rate since April of 2010.
Most of the major sectors have come under pressure on the day, reflecting the broad based weakness visible on Wall Street.
Oil service stocks are posting particularly steep losses, moving lower along with the price of crude oil. With crude for August delivery sliding $1.42 to $78.34 a barrel, the Philadelphia Oil Service Index is down by 3.8 percent.
Significant weakness is also visible among networking stocks, as reflected by the 3.5 percent loss being posted by the NYSE Arca Networking Index. Emulex (ELX) and Alcatel-Lucent (ALU) are turning in two of the sector's worst performances.
Steel stocks are also seeing substantial weakness amid concerns about the economic outlook, with the NYSE Arca Steel Index down by 3.5 percent. Brokerage, semiconductor, electronic storage, and airline stocks are also posting steep losses.
In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index fell by 0.7 percent, while Hong Kong's Hang Seng Index ended the day down by 0.5 percent.
The major European markets also showed significant moves to the downside on the day. While the U.K.'s FTSE 100 Index tumbled by 1.1 percent, while the German DAX Index and the French CAC 40 Index plummeted by 2.1 percent and 2.2 percent, respectively.
In the bond market, treasuries have moved notably higher amid the weakness among stocks. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.4 basis points at 1.608 percent.
by RTT Staff Writer
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