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U.S. Stocks Pull Back Further Off Record Highs

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Stocks showed a notable move to the downside during trading on Monday, extending the pullback seen in the previous session. With the drop on the day, the major averages pulled back further off the record highs set last Wednesday.

The Dow ended the day just off its lows of the session, down 268.37 points or 1 percent at 27,783.04, while the Nasdaq tumbled 97.48 points or 1.1 percent to 8,567.99 and the S&P 500 slumped 27.11 points or 0.9 percent to 3,113.87.

The continued weakness on Wall Street came following the release of a report from the Institute for Supply Management showing a continued contraction in U.S. manufacturing activity in the month of November.

The ISM said its purchasing managers index edged down to 48.1 in November from 48.3 in October, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to inch up to 49.2.

"November was the fourth consecutive month of PMI contraction, at a faster rate compared to the prior month," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. "Global trade remains the most significant cross-industry issue."

A separate report released by the Commerce Department showed an unexpected decrease in U.S. construction spending in the month of October.

The disappointing U.S. economic news offset earlier positive sentiment generated by some upbeat Chinese manufacturing data.

Traders were also reacting to President Donald Trump announcing plans to reinstate tariffs on metal imports from Brazil and Argentina.

"Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers," Trump said in a post on Twitter.

He added, "Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries."

Sector News

Software, semiconductor and networking stocks turned in some of the market's worst performances on the day, contributing to the steep drop by the tech-heavy Nasdaq.

The Dow Jones U.S. Software Index, the Philadelphia Semiconductor Index and the NYSE Arca Networking Index slumped by 1.5 percent.

Significant weakness also emerged among commercial real estate stocks, as reflected by the 1.5 percent drop by the Dow Jones U.S. Real Estate Index.

Telecom, chemical, and natural gas stocks also saw notable weakness on the day, while steel stocks were among the few groups to buck the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index jumped by 1 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

Meanwhile, the major European markets moved sharply lower over the course of the session. While the U.K.'s FTSE 100 Index slid by 0.8 percent, the French CAC 40 Index and the German DAX Index tumbled by 2 percent and 2.1 percent, respectively.

In the bond market, treasuries showed a notable move to the downside despite the disappointing U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6 basis points to 1.836 percent.

Looking Ahead

Trading activity may be relatively light on Tuesday, with a lack of major U.S. economic data keeping some traders on the sidelines.

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