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Stocks Mostly Lower Amid Lingering Trade Concerns - U.S. Commentary


Stocks have moved mostly lower over the course of the trading session on Monday, pulling back after posting notable gains last week. The major averages have all moved to the downside, with the tech-heavy Nasdaq showing a particularly steep drop.

Currently, the major averages are all in negative territory, although the Nasdaq is underperforming its counterparts. The Nasdaq is down 66.11 points or 0.8 percent at 7,943.93, while the Dow is down 20.39 points or 0.1 percent at 26,134.28 and the S&P 500 is down 7.54 points or 0.3 percent at 2,897.44.

The weakness on Wall Street partly reflects lingering trade concerns amid reports President Donald Trump intends to proceed with plans to impose tariffs on $200 billion worth of Chinese goods as early as today.

A report from the Wall Street Journal said the new tariffs would bet set at 10 percent, lower than the 25 percent previously floated by the administration.

The threat of new tariffs could still lead China to decline an offer to hold high-level trade talks, as the country is not prepared to negotiate with a "gun pointed to its head," the Journal noted.

In a post on Twitter this morning, Trump claimed tariffs have put the U.S. in a very strong bargaining position and called subsequent cost increases "almost unnoticeable."

China has pledged to retaliate to any new tariffs imposed by the U.S., with reports suggesting the communist country could go beyond raising tariffs on U.S. imports and restrict exports of goods critical to U.S. manufacturing.

A steep drop by shares of Twitter (TWTR) is weighing on the Nasdaq after MoffettNathanson reiterated its Sell rating on the social media giant's stock and lowered its price target to $21 from $23.

On the U.S. economic front, the New York Federal Reserve released a report showing a bigger than expected slowdown in the pace of growth in regional manufacturing activity in the month of September.

The New York Fed said its general business conditions index fell to 19.0 in September from 25.6 in August, although a positive reading continues to indicate growth in regional manufacturing activity. The index had been expected to dip to 23.0.

Sector News

Despite the pullback by the broader markets, most of the major sectors are showing relatively modest moves in mid-day trading.

Retail stocks continue to see notable weakness, however, with the Dow Jones Retail Index sliding by 1.1 percent. The index is moving lower for the third consecutive session.

Brokerage and biotechnology stocks have also moved to the downside, although selling pressure has remained somewhat subdued.

On the other hand, gold stocks have moved sharply higher on the day, driving the NYSE Arca Gold Bugs Index up by 2.4 percent.

The rally by gold stocks comes amid an increase by the price of the precious metal, with gold for December delivery climbing $6.80 to $1,207.90 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. China's Shanghai Composite Index tumbled by 1.1 percent, while Hong Kong's Hang Seng Index plunged by 1.3 percent. The Japanese markets were closed for a holiday.

The major European markets showed more modest moves to the downside on the day. While the U.K.'s FTSE 100 Index closed just below the unchanged line, the French CAC 40 Index and the German DAX Index edged down by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries have climbed back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.990 percent.

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