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Stocks Extending Last Week's Sell-Off In Morning Trading - U.S. Commentary


After initially showing a lack of direction, stocks have moved mostly lower over the course of morning trading on Monday. The major averages have slid firmly into negative territory, adding to the steep losses posted last week.

Currently, the major averages are just off their lows of the session. The Dow is down 283.96 points or 1.2 percent at 24,104.99, the Nasdaq is down 30.88 points or 0.4 percent at 6,938.37 and the S&P 500 is down 25.75 points or 1 percent at 2,607.33.

The continued weakness on Wall Street reflects lingering concerns about the global economic outlook along with skepticism about the potential for a long-term trade deal between the U.S. and China.

Overall trading activity is somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

The economic calendar remains relatively light throughout the week, although reports on producer and consumer price inflation, retail sales, and industrial production are likely to attract attention in the coming days.

Traders may nonetheless remain reluctant to make significant moves ahead of the Federal Reserve's monetary policy meeting next week.

With the Fed widely expected to raise interest rates by another quarter point, traders will closely scrutinize the accompanying statement for clues about future rate hikes.

Extending a recent sell-off, banking stocks have shown a substantial move to the downside in morning trading. The KBW Bank Index has slumped by 2.6 percent to its lowest intraday level in well over a year.

Significant weakness has also emerged among energy stocks, which are moving lower along with the price of crude oil. Crude for January delivery is sliding $0.76 to $51.85 a barrel after jumping $1.12 to $52.61 a barrel last Friday.

Transportation, telecom, and steel stocks are also seeing considerable weakness, while gold stocks are moving notably higher despite a modest decrease by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Monday. Japan's Nikkei 225 Index plunged by 2.1 percent, while Hong Kong's Hang Seng Index tumbled by 1.2 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has edged down by 0.2 percent, the French CAC 40 Index and the German DAX Index are down by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries are showing a lack of direction after trending higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.845 percent.

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