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Major Averages Turn Mixed As Nasdaq Falls Sharply - U.S. Commentary


Stocks are turning in a mixed performance in morning trading on Monday, as the Dow and the S&P 500 are adding to last week's strong gains but the tech-heavy Nasdaq is extending the sharp pullback seen last Friday.

Currently, the major averages remain on opposite sides of the unchanged line. While the Nasdaq is down 85.42 points or 1.2 percent at 7,271.57, the Dow is up 121.12 points or 0.5 percent at 25,391.95 and the S&P 500 is up 4.16 points or 0.2 percent at 2,727.22.

A continued decline by Apple (AAPL) is weighing on the Nasdaq, with the tech giant tumbling by 4 percent to a new three-month intraday low.

Apple is extending the sell-off seen in the previous session after a report from Japan's Nikkei newspaper said demand for the company's iPhone XR appears to be disappointing.

Overall trading is somewhat subdued, however, with traders reluctant to make significant moves ahead of the highly anticipated midterm elections on Tuesday, which will decide control of both the House and Senate.

Democrats are seen as having a much better chance to claim a majority in the House than in the Senate, but controlling the lower chamber would still allow Democrats to hinder President Donald Trump's agenda.

The Federal Reserve's looming monetary policy announcement is also keeping some traders on the sidelines, with the Fed due to announce is latest decision on Thursday.

While the Fed is widely expected to leave interest rates unchanged, traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December.

Meanwhile, traders have largely shrugged off a report from the Institute for Supply Management showing a modest slowdown in the pace of growth in the service sector in the month of October.

The ISM said its non-manufacturing index dipped to 60.3 in October after climbing to 61.6 in September, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to drop to 59.3.

Last month, the ISM said the non-manufacturing index unexpectedly rose in September, reaching its highest level since the inception of the composite index in 2008.

Natural gas stocks have moved sharply higher along with the price of the commodity, driving the NYSE Arca Natural Gas Index up by 3.4 percent.

Tobacco stocks are also seeing substantial strength in morning trading, moving higher along with oil, commercial real estate, and pharmaceutical stocks.

On the other hand, semiconductor stocks are seeing significant weakness, extending the pullback seen last Friday. Reflecting the weakness in the sector, the Philadelphia Semiconductor Index is down by 2.3 percent.

Considerable weakness is also visible among retail stocks, with Amazon (AMZN) helping to lead the way lower after Trump said his administration is looking into antitrust violations by the online retail giant.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index plunged by 2.1 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index is down by 0.1 percent and the German DAX Index is down by 0.3 percent.

In the bond market, treasuries are regaining some ground after moving notably lower last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.3 basis points at 3.191 percent.

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