Stocks continue to see significant weakness in mid-day trading on Monday, although selling pressure has waned from earlier in the session. Renewed worries about the financial situation in Europe contributed to the sell-off that was seen in early trading.
The major averages have climbed off their worst levels of the day but remain firmly in negative territory. The Dow is down 138.61 points or 1.1 percent at 12,683.96, the Nasdaq is down 52.44 points or 1.8 percent at 2,872.86 and the S&P 500 is down 17.97 points or 1.3 percent at 1,344.69.
Much of the weakness on Wall Street stems from renewed concerns about the European debt crisis, particularly about developments in Spain and Greece.
Worries that Spain could require a full bailout contributed to the early weakness among U.S. stocks, with the yield on Spanish ten-year bonds climbing further above 7 percent.
Contributing to the worries about Spain, the country's central bank said Spanish GDP fell by 0.4 percent in the second quarter following a 0.3 percent contraction in the first quarter.
Traders also remain concerned about Greece, with officials from the country's troika of international creditors due to visit Athens on Tuesday to review the progress Greece has made with respect to enacting reforms and austerity measures.
Germany's Der Spiegel has reported that the International Monetary Fund does not want to provide Greece with any additional financing.
Peter Boockvar, managing director at Miller Tabak said, "From the perspective of its creditors, particularly the Germans, the moment of 'enough is enough' is about to be reached with Greece."
The focus on Europe comes amid a lack of major U.S. economic data, although key reports on second quarter GDP, new home sales, durable goods orders and consumer sentiment are scheduled to be released later in the week.
Among individual stocks, shares of McDonald's (MCD) have come under pressure after the fast food giant reported second quarter earnings that fell year-over-year. McDonald's is down by 2.7 percent, pulling back further off last Thursday's two-month closing high.
With traders expressing concerns about the outlook for global demand, steel stocks are seeing substantial weakness. The NYSE Arca Steel Index is down by 3.2 percent after hitting its worst intraday level in almost a month earlier in the session.
Mechel (MTL) and AK Steel (AKS) are turning in two of the steel sector's worst performances, falling by 6 percent and 5.2 percent, respectively.
Software stocks have also moved sharply lower on the day, dragging the Dow Jones Software Index down by 2.9 percent. Nuance Communications (NUAN), Sapient (SAPE), and Check Point (CHKP) are posting notable losses.
Considerable weakness also remains visible among airline stocks, as reflected by the 2.6 percent loss being posted by the NYSE Arca Airline Index. The loss extends a recent downward move by the index, which has fallen to its lowest intraday level in well over a month.
Gold, internet, biotechnology, and healthcare provider stocks are also under pressure, moving to the downside along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region saw significant weakness during trading on Monday. Japan's Nikkei 225 Index fell by 1.9 percent, while Hong Kong's Hang Seng Index plummeted by 3 percent.
The major European markets also moved sharply lower on the day. The U.K.'s FTSE 100 Index tumbled by 2.1 percent, while the French CAC 40 Index and the German DAX Index plunged by 2.9 percent and 3.2 percent, respectively.
In the bond market, treasuries have moved moderately higher amid the substantial weakness among stocks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.4 basis points at 1.426 percent.
by RTT Staff Writer
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