Stocks have moved mostly lower in early trading on Monday following the release of a disappointing report on U.S. retail sales. The major averages have slid firmly into negative territory, partly offsetting last Friday's standout gains.
The major averages have seen some further downside in the past few minutes, hitting new lows for the young session. The Dow is down 61.69 points or 0.5 percent at 12,715.40, the Nasdaq is down 16.42 points or 0.6 percent at 2,892.05 and the S&P 500 is down 5.98 points or 0.4 percent at 1,350.80.
The early weakness on Wall Street is largely due to the release of a report from the Commerce Department showing an unexpected drop in retail sales in the month of June.
The report showed that retail sales fell by 0.5 percent in June following a 0.2 percent decrease in May. The drop surprised economists, who had expected sales to edge up by 0.2 percent.
With the unexpected decrease, retail sales fell for the third consecutive month, adding to recent concerns about the economic outlook.
Jennifer Lee, senior economist at BMO Capital Markets, called the continued drop in sales "an unexpected but not shocking-knock-me-off-my-chair move, considering the headwinds consumers are facing these days."
Meanwhile, a separate report from the New York Federal Reserve showed stronger than expected growth in regional manufacturing activity.
The New York Fed said its general business conditions index rose to 7.4 in July from 2.3 in June, with a positive reading indicating growth in the manufacturing sector. Economists had expected the index to show a more modest increase to a reading of 4.5.
A positive reaction to quarterly results from Citigroup (C) is also helping to limit the downside for the markets, with the financial giant up by 1 percent in early trading.
Citigroup reported second quarter earnings that fell year-over-year but still came in above analyst estimates. At the same time, revenue for quarter dropped by slightly more than anticipated.
Networking stocks are seeing significant weakness in early trading, with the NYSE Arca Networking Index down by 1.6 percent. Alcatel-Lucent (ALU) and Polycom (PLCM) are turning in two of the sector's worst performances.
Considerable weakness has also emerged among semiconductor stocks, as reflected by the 1.4 percent loss being posted by the Philadelphia Semiconductor Index. Defense, trucking, and steel stocks are also posting notable losses.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a public holiday. While Hong Kong's Hang Seng Index edged up by 0.2 percent, China's Shanghai Composite Index tumbled by 1.7 percent.
Meanwhile, the major European markets are all seeing modest weakness on the day. The U.K.'s FTSE 100 Index is down by 0.2 percent, the German DAX Index is down by 0.3 percent, and the French CAC 40 Index is down by 0.4 percent.
In the bond market, treasuries have moved notably higher on the heels of the disappointing retail sales data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.9 basis points at 1.45 percent.
by RTT Staff Writer
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