Plus   Neg

U.S. Stocks Remain Mostly Lower After Early Pullback

wallstreet oct26 08jul19 lt

After coming under pressure early in the session, stocks remain firmly negative in mid-day trading on Monday. The major averages are adding to the modest losses posted in the previous session, pulling back further off the record closing highs set last Wednesday.

In recent trading, the major averages have moved roughly sideways, stuck in the red. The Dow is down 137.23 points or 0.5 percent at 26,784.89, the Nasdaq is down 75.43 points or 0.9 percent at 8,086.36 and the S&P 500 is down 16.22 points or 0.5 percent at 2,974.19.

The weakness on Wall Street partly reflects waning optimism about a near-term interest rate cut following last Friday's much better than expected jobs data.

CME Group's FedWatch Tool still points to a rate cut at the next Federal Reserve meeting later this month, although expectations have dramatically shifted toward a 25 basis point cut rather than a 50 basis point cut.

The shift came after the Labor Department's closely watched report showed employment jumped by 224,000 jobs in June compared to expectations for an increase of 160,000 jobs.

A notable drop by Apple (AAPL) is also weighing on the markets, with the tech giant tumbling by 2.1 percent after Rosenblatt Securities downgraded its rating on the company's stock to Sell from Neutral.

Fellow Dow component Boeing (BA) is also down by 1.7 percent after Saudi Arabia's flyadeal became the first airline to officially cancel an order for the beleaguered aerospace giant's 737 MAX aircraft.

However, in light of the focus on the outlook for rates, overall trading activity is somewhat subdued ahead of Fed Chairman Jerome Powell's congressional testimony later this week.

Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.

Wednesday will also see the release of the minutes of the Fed's last monetary policy meeting, which may shed additional light on the central bank's decision to make notable changes to its accompanying statement.

Sector News

Biotechnology stocks have moved sharply lower over the course of the trading session, resulting in a 2.4 percent slump by the NYSE Arca Biotechnology Index.

The biotechnology index continue to give back ground after ending last Wednesday's trading at its best closing level in well over two months.

Considerable weakness also remains visible among computer hardware stocks, as reflected by the 1.4 percent drop by the NYSE Arca Computer Hardware Index.

NetApp (NTAP) has led the sector lower after Citigroup downgraded its rating on the data storage provider to Sell from Neutral.

Networking, healthcare, and brokerage stocks are also seeing notable weakness on the day, while most of the other major sectors are showing more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan's Nikkei 225 Index slumped by 1 percent, while China's Shanghai Composite Index plunged by 2.6 percent.

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

In the bond market, treasuries are seeing modest strength following the sharp pullback seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.2 basis points at 2.036 percent.

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