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U.S. Stocks Move Moderately Lower After Experiencing Early Choppiness

wallstreet aug27 09dec19 lt

After showing a lack of direction early in the session, stocks moved moderately lower over the course of the trading day on Monday. The major averages slid more firmly into negative territory, snapping a three-day winning streak.

The major averages saw further downside going into the close, ending the session just off their lows of the day. The Dow slid 105.46 points or 0.4 percent to 27,909.60, the Nasdaq fell 34.70 points or 0.4 percent to 8,621.83 and the S&P 500 dropped 9.95 points or 0.3 percent to 3,135.96.

The weakness that emerged on Wall Street came as some traders looked to cash in on the recent strength in the markets, which helped lift the major averages back within striking distance of the record highs set late last month.

Lingering uncertainty about U.S.-China trade talks also weighed on Wall Street, as new 15 percent tariffs on $165 billion worth of Chinese imports are currently still set to take effect this coming Sunday.

The new round of tariffs could throw a wrench into negotiations over a phase on trade deal, which is reportedly being held up in part by a dispute over how much to roll back existing tariffs.

Rising tensions between the U.S. and North Korea also led to some caution among traders after North Korea conducted a "very important test" at a long-range missile launch site.

President Donald Trump warned North Korean leader Kim Jong Un risks losing "everything" if he acts in a hostile way, leading a North Korean official to describe the president as a "heedless and erratic old man."

Nonetheless, overall trading activity remained somewhat subdued, with traders looking ahead to the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, although traders are still likely to pay close attention to the accompanying statement for clues about the outlook for rates.

A lack of major U.S. economic data also kept some traders on the sidelines ahead of the release of reports on retail sales and consumer and producer prices in the coming days.

Despite the pullback by the broader markets, most of the major sectors finished the session showing only modest moves on the day.

Healthcare, brokerage and biotechnology stocks saw some weakness, although selling pressure was relatively subdued.

On the other hand, natural gas stocks showed a strong move to the upside, driving the NYSE Arca Natural Gas Index up by 1.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved modestly higher during trading on Monday. Japan's Nikkei 225 Index rose by 0.3 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index fell by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries pulled back off their early highs but managed to remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 1.829 percent.

Looking Ahead

Revised readings on labor productivity and costs in the third quarter may attract some attention on Tuesday, but trading activity is likely to remain relatively light as the Fed announcement looms.

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