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Stocks Move Modestly Lower In Morning Trading - U.S. Commentary

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After an initial move to the upside, stocks have moved modestly lower over the course of morning trading on Monday. The major averages have pulled back into negative territory, although selling pressure has remained relatively subdued.

Currently, the major averages remain stuck in the red. The Dow is down 71.21 points or 0.3 percent at 26,341.09, the Nasdaq is down 35.99 points or 0.5 percent at 7,948.17 and the S&P 500 is down 7.76 points or 0.3 percent at 2,899.65.

The modest weakness on Wall Street partly reflects a negative reaction to earnings news from Goldman Sachs (GS), with the financial giant sliding by 3 percent.

The drop by Goldman Sachs comes after the company reported better than expected first quarter earnings but revenues that missed expectations.

Shares of Citigroup (C) are also seeing modest weakness even though the company reported first quarter earnings that exceeded analyst estimates.

Nonetheless, traders seem reluctant to make significant moves ahead of the release of quarterly results from a slew of other big-name companies in the coming days.

Bank of America (BAC), Johnson & Johnson (JNJ), IBM (IBM), Morgan Stanley (MS), PepsiCo (PEP), and American Express (AXP) are among the companies due to report their results this week.

The impending release of data on industrial production, retail sales, and housing starts may also keep some traders on the sidelines along with the holiday on Friday.

In economic news, the New York Federal Reserve released a report showing growth in regional manufacturing activity picked up somewhat in April but remained fairly subdued.

The New York Fed said its headline general business conditions index climbed to 10.1 in April after falling to 3.7 in March, with a positive reading indicating growth in regional manufacturing activity.

Most of the major sectors are showing only modest moves, contributing to the lackluster performance by the broader markets.

Substantial strength is visible among computer hardware stocks, however, with the NYSE Arca Computer Hardware Index surging up by 2.1 percent to a six-month high.

Digital imaging company Electronics For Imaging (EFII) is soaring by 26.5 percent after agreeing to be acquired by an affiliate of Siris Capital in an all-cash transaction valued at approximately $1.7 billion.

On the other hand, semiconductor, gold, and biotechnology stocks have moved to the downside, contributing to the modest losses by the major averages.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index surged up by 1.3 percent, while Hong Kong's hang Seng Index fell by 0.3 percent.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index is down by 0.1 percent, the French CAC 40 Index and the German DAX Index are both up by 0.1 percent.

In the bond market, treasuries are roughly flat after moving notably lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.553 percent.

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