With lingering concerns about developments overseas weighing on the minds of investors, stocks moved sharply lower at the start of trading on Monday. The major averages showed notable moves to the downside, adding to the losses posted last week.
The major averages have climbed off their lows for the young session in the past few minutes but remain firmly negative. The Dow is down 113.22 points or 0.9 percent at 12,707.38, the Nasdaq is down 22.65 points or 0.8 percent at 2,911.17, and the S&P 500 is down 12.20 points or 0.9 percent at 1,341.19.
The initial weakness reflects continued worries about the political uncertainty in Greece, as the debt-plagued nation continues to struggle to form a coalition government over a week after parliamentary elections.
While Greek President Karolos Papoulias continues to meet with party leaders in a last ditch effort to form a government, the country seems poised for a new round of elections.
Peter Boockvar, managing director at Miller Tabak, noted that another Greek election would basically being an up or down vote on the country's Euro membership.
"The growing possibility of Greece saying bye bye has put the entire region into the realm of the unknown in terms of the economic ripple effects," Boockvar said.
Traders are also keeping a close eye on developments in China, where the central bank announced over the weekend that it would lower the reserve requirement for banks by 50 basis points in a bid to inject more liquidity into the system.
Resource stocks are seeing substantial weakness amid concerns about the outlook for demand, with oil service stocks posting particularly steep losses. The Philadelphia Oil Service Index is down by 2 percent after falling to its lowest intraday level in almost five months.
The weakness among oil service stocks comes amid a sharp drop by the price of crude oil, with crude for June delivery tumbling $2.03 to $94.10 a barrel.
Outside of the resource sector, significant weakness is also visible among financial stocks, as traders continue to worry about JP Morgan's (JPM) revelation of a $2 billion trading loss.
Most of the other major sectors have also moved to the downside, with chemical, networking, semiconductor, and healthcare provider stocks posting notable losses.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday. Japan's Nikkei 225 Index crept up by 0.2 percent, while Hong Kong's Hang Seng Index ended the day down by 1.2 percent.
Meanwhile, the major European markets are all seeing significant weakness on the day. While the U.K.'s FTSE 100 Index is down by 2.2 percent, the French CAC 40 Index and the German DAX Index are both down by 2.5 percent.
In the bond market, treasuries have shown a strong upward move amid the weakness among stocks. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.7 basis points at 1.774 percent.
by RTT Staff Writer
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