After moving modestly lower in early trading on Monday, stocks have remained mostly negative over the course of the session. Profit taking is contributing to the weakness on Wall Street following the recent strength in the markets.
The major averages have been rangebound in recent trading, stuck modestly below the unchanged line. The Dow is down 25.93 points or 0.2 percent at 13,567.44, the Nasdaq is down 11.04 points or 0.4 percent at 3,176.09 and the S&P 500 is down 2.07 points or 0.1 percent at 1,463.70.
The weakness on Wall Street comes as traders are cashing in on recent gains following the Federal Reserve-inspired rally that was seen late last week.
The gains lifted the Dow and the S&P 500 to their best closing levels in well over four years, while the tech-heavy Nasdaq reached a nearly twelve-year closing high.
Last week's rally came on the heels of the Federal Reserve's announcement of its plans to launch a third round of quantitative easing as part of an effort to boost the sluggish economy.
The Fed said it would purchase additional agency mortgage-backed securities at a pace of $40 billion per month, adding that it will continue the purchases until the outlook for the labor market improves substantially.
Disappointing manufacturing data has also helped to drag stocks lower, with a report from the New York Federal Reserve showing that conditions for New York manufacturers have deteriorated at an accelerated rate in the month of September.
The New York Fed said its general business conditions index fell to a negative 10.41 in September from a negative 5.85 in August, with a negative reading indicating a contraction in regional manufacturing activity. Economists had been expecting the index to climb to a negative 2.0.
James Knightley, senior economist at ING, said, "This is the weakest reading since April 2009 and will heighten fears that the U.S. manufacturing sector is returning to recession."
In corporate news, shares of Lowe's (LOW) are moderately higher after the home improvement retailer announced that it has withdrawn its offer to acquire Canadian rival Rona for C$14.50 per share in cash.
While most of the major sectors are showing relatively modest moves, steel stocks have come under substantial selling pressure. The NYSE Arca Steel Index has fallen by 2 percent after ending the previous session at a four-month closing high.
Cliffs Natural Resources (CLF) has helped to lead the steel sector lower, falling by 6 percent after J.P. Morgan downgraded its rating on the stock to Neutral from Overweight.
Significant weakness is also visible among housing stocks, as reflected by the 1.9 percent loss being posted by the Philadelphia Housing Sector Index. The loss by the index comes after it reached a nearly five-year closing high last Friday.
Electronic storage stocks are also under considerable pressure, dragging the NYSE Arca Disk Drive Index down by 1.3 percent. Transportation, brokerage, and chemical 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. Australia's All Ordinaries Index rose by 0.3 percent, while China's Shanghai Composite Index tumbled by 2.1 percent.
Meanwhile, the major European markets all moved back the downside on the day. While the German DAX Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index fell by 0.5 percent and the French CAC 40 Index slid 0.8 percent.
In the bond market, treasuries are regaining some ground after trending lower in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.5 basis points at 1.835 percent.
by RTT Staff Writer
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