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Stocks Continue To Turn In Mixed Performance - U.S. Commentary


After moving in opposite directions early in the session, stocks continue to turn in a mixed performance in mid-day trading on Monday. 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.

While, the Nasdaq is down 66.53 points or 0.9 percent at 7,290.47, the Dow is up 156.58 points or 0.6 percent at 25,427.41 and the S&P 500 is up 8.48 points or 0.3 percent at 2,731.54.

A drop by Apple (AAPL) is weighing on the Nasdaq, with the tech giant down by 2.8 percent after hitting 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.

Online retail giant Amazon (AMZN) is also posting a notable loss after President Donald Trump told Axios his administration is looking into antitrust violations by the company.

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 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.

Sector News

Natural gas stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Natural Gas Index up by 3.4 percent. With the jump, the index is climbing further off the more than two-year closing low set last Monday.

The rally by natural gas stocks comes amid a sharp increase by the price of the commodity, with natural gas for December delivery surging up $0.267 to $3.551 per million BTUs.

Significant strength is also visible among tobacco stocks, as reflected by the 2.7 percent spike by the NYSE Arca Tobacco Index.

Oil and oil service stocks are also seeing notable strength amid an increase by the price of crude oil, moving higher along with utilities, commercial real estate, and pharmaceutical stocks.

On the other hand, considerable weakness among semiconductor and computer hardware stocks is helping to keep the tech-heavy Nasdaq in negative territory.

Reflecting the weakness in the sectors, the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index are down by 1.9 percent and 1.4 percent, respectively.

Other Markets

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 turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index closed just below the unchanged and the German DAX Index edged down by 0.2 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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