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Stocks Moving Sharply Lower, Partly Offsetting Recent Gains - U.S. Commentary


With traders cashing in on some of the recent strength in the markets, stocks have moved sharply lower over the course of the trading day on Monday. The losses on the day have offset last Friday's standout gains, which came amid a positive reaction to the monthly jobs report.

The major averages have seen some further downside in recent trading, hitting new lows for the session. The Dow is down 126.29 points or 0.9 percent at 13,883.50, the Nasdaq is down 38.88 points or 1.2 percent at 3,140.22 and the S&P 500 is down 14.86 points or 1 percent at 1,498.31.

The weakness on Wall Street comes as traders are doing some profit taking after recent gains lifted the Dow and the S&P 500 to five-year highs.

The Dow ended Friday's trading above 14,000 for the first time since October of 2007, leading some analysts to suggest that the markets have become overbought.

Uncertainty about the political situation in Europe is also weighing on stocks after opposition leaders called on Spanish Prime Minister Mariano Rajoy to resign amid allegations of corruption.

Traders may also be looking ahead to the European Central Bank's announcement of its latest monetary policy decision on Thursday.

On the U.S. economic front, the Commerce Department released a report showing a notable increase in factory orders in December, although the pace of growth still fell short of economist estimates.

The report showed that factory orders surged up by 1.8 percent in December following a revised 0.3 percent decrease in November. Economists had expected orders to jump by 2.4 percent compared to the marginal increase originally reported for the previous month.

Among individual stocks, shares of Gannett (GCI) have moved to the downside even though the newspaper company reported better than expected fourth quarter results.

Food distribution giant Sysco (SYY) has also come under pressure after reporting fourth quarter earnings that came in below analyst estimates.

On the other hand, shares of Acme Packet (APKT) have moved sharply higher after the networking company agreed to be acquired by Oracle (ORCL) for $2.1 billion.

Sector News

Steel stocks continue to turn in some of the market's worst performances in mid-day trading, with the NYSE Arca Steel Index down by 1.9 percent. ArcelorMittal (MT) and Universal Stainless (USAP) are posting notable losses.

Considerable weakness has also emerged among software stocks, as reflected by the 1.6 percent loss being posted by the Dow Jones Software Index. The loss by the index comes after it ended the previous session at its best closing level in over four months.

Oracle has helped to lead the software sector lower, with the business software giant falling by 2.4 percent following news of its deal to acquire Acme Packet.

Electronic storage, banking, and retail stocks have also come under pressure over the course of the session, moving lower along with most of the major sectors.

On the other hand, gold stocks are bucking the downtrend, resulting in a 1.4 percent gain by the NYSE Arca Gold Bugs Index. The gains by gold stocks come amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Monday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets all moved sharply lower on the day. While the U.K.'s FTSE 100 Index fell by 1.6 percent, the German DAX Index and the French CAC 40 Index tumbled by 2.5 percent and 3 percent, respectively.

In the bond market, treasuries have moved notably higher over the course of the session, bouncing off their recent lows. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.2 basis points at 1.958 percent.

by RTTNews Staff Writer

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