Stocks have moved mostly lower over the course of the trading day on Monday after initially showing a lack of direction. Profit taking has contributed to the weakness on Wall Street following the recent strength in the markets.
The major averages have climbed off their worst levels of the day in recent trading but remain firmly negative. The Dow is down 88.62 points or 0.7 percent at 13,119.33, the Nasdaq is down 16.54 points or 0.6 percent at 3,004.32 and the S&P 500 is down 7.47 points or 0.5 percent at 1,398.40.
The weakness that has emerged on Wall Street comes as traders are cashing in on the recent gains, which lifted the major averages to three-month closing highs last Friday.
Traders are also digesting a report from Japan's Cabinet Office showing weaker than expected Japanese economic growth in the second quarter.
The report showed that Japanese GDP rose by 0.3 percent sequentially in the second quarter. The increase was tame compared to the 0.6 percent growth expected by economists. Annually, GDP rose 1.4 percent, while economists had expected a sharper 2.5 percent increase.
While the report has added to recent concerns about the outlook for the global economy, the data also hints at the possibility of further monetary stimulus.
David Rea, Japan Economist at Capital Economics, said, "Fiscal policy is in no shape to provide additional stimulus, increasing the pressure on the Bank of Japan to further augment its asset purchase program."
"We expect the Bank will extend the program again at least once more this year, probably in October when it publishes its semi-annual report on economic activity and prices," he added.
Despite the weakness that has emerged on Wall Street, shares of Sysco (SYY: Quote) are turning in a strong performance after the food distributor reported better than expected fourth quarter earnings. Sysco is currently posting a 3.8 percent gain.
Steel stocks have shown a notable move to the downside on the day, dragging the NYSE Arca Steel Index down by 2.1 percent. The loss by the index comes after it ended the previous session at a nearly three-month closing high.
Schnitzer Steel (SCHN: Quote) has helped to lead the steel sector lower, falling by 10.6 percent after Bank of America downgraded its rating on the stock to Underperform from Neutral.
Considerable weakness has also emerged among semiconductor stocks, as reflected by the 1.7percent loss being posted by the Philadelphia Semiconductor Index. With the loss, the index is pulling back off the three-month closing high it set last Friday.
Oil service, networking, biotechnology, and health insurance stocks have also come under pressure on the day, with oil service stocks moving lower along with the price of crude oil. Most of the other major sectors have also moved to the downside.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday. While Japan's Nikkei 225 Index edged down by 0.1 percent, Australia's All Ordinaries Index crept up by 0.2 percent.
Meanwhile, the major European markets all moved to the downside on the day. The German DAX Index fell by 0.5 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index both ended the day down by 0.3 percent.
In the bond market, treasuries have moved modestly higher over the course of the trading day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, has dipped 1.2 basis points to 1.637 percent.
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by RTT Staff Writer
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