RTTNews - Stocks are seeing continued weakness in early afternoon trading on Monday after a notably lower start to the session. The major averages are all in the red amid renewed concerns about near-term economic conditions.
The day's downward move has been due in part to the World Bank trimming its worldwide gross domestic product estimates, indicating a continued bleak outlook for the near future.
Further, some traders may be doing some profit taking ahead of the Federal Reserve's policy meeting along with some key housing, employment and personal spending figures set to be released later this week.
In other news, President Barack Obama announced an agreement with the pharmaceutical industry that aims to reduce Medicare drug costs.
The major indices have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is currently down 159.84 at 8,379.89, the Nasdaq is down 53.62 at 1,773.85 and the S&P 500 is down 22.89 at 898.34.
Most of the major sector indices continue to tread firmly in negative territory, prompting the steep losses seen being shown by the major averages in afternoon trading.
Resource stocks continue to show notable weakness on the day, with the NYSE Arca Steel Index plunging by 7.6 percent on the day. The Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index are also retreating, falling by 5.9 percent and 4.7 percent, respectively.
The NYSE Arca Natural Gas Index is being dragged down by shares of Ultra Petroleum (UPL), which have dropped by 9.9 percent on the day. The pullback has brought the stock to its worst intraday price in two months.
Gold stocks are also turning in a disappointing performance, with the NYSE Arca Gold Bugs Index falling by 4.9 percent, reaching its lowest intraday level in six weeks. The retreat by gold stocks comes as the price of the precious metal is down $15.70 at $920.50 an ounce.
Additionally, railroad, airline, banking and commercial real estate stocks are also suffering, reflecting the weakness in a variety of market segments on the session.
Stocks In The News
Clean Energy Fuels (CLNE) is down in afternoon dealing after the firm said it intends to offer 6 million shares of its common stock for sale to the public. The stock is down by 10 percent on the day, as the offering has raised some concern over share dilution. The day's decline has placed the stock at its lowest intraday level in just over five weeks.
Sun Life Financial (SLF) is also sliding following the appointment of Colm Freyne as interim Chief Financial Officer effective July 1, 2009. The move came after the resignation of Rick McKenney, who will be taking up an executive position with a U.S. financial services company. The firm's stock is down by 7.9 percent, sliding further away from an eight month high set earlier this month.
Specialty Underwriters Alliance (SUAI) is on the rise after Tower Group (TWGP) agreed to acquire the company for about $107 million. Shares of SUA are soaring on the day, jumping by 55 percent. The day's upward move has lifted the stock to its best level in 19 months.
In Focus: Global GDP, Earnings, Corporate News, Fed Buyback
As mentioned above, the weakness in the markets comes on news that the World Bank reduced its global GDP estimate as well as the outlook for most other economies and warned of a large decline in international capital flows amidst financial market fragility and recession.
The Washington-based lender now expects the world economy to shrink by 2.9 percent this year, larger than its earlier prediction of a 1.7 percent decrease.
On the earnings front, drug store retailer Walgreen (WAG) reported third-quarter earnings that fell to $0.53 per share from $0.58 per share in the year-ago quarter, coming below analyst estimates of $0.56 per share. The stock is down by 5.2 percent as traders react to the news.
Shares of Marvell Technology (MRVL) have also turned lower even though the chip maker raised its second quarter revenue guidance, citing an improvement in demand. The company now expects revenues of $600 to $630 million compared to its previous guidance of $540 to $580 million.
In other news from the tech sector, Apple Inc. (AAPL) announced that it has sold over one million iPhone 3GS models through Sunday, June 21, the third day after its launch. The company said that six million customers have downloaded the new iPhone 3.0 software in the first five days since its release.
Meanwhile, Anglo-Swiss mining company Xstrata has approached rival Anglo American, seeking their consideration regarding a merger of the two companies. If accepted, the merger would create the third largest mining firm in the world.
The Federal Reserve continued its treasury buyback program Monday, completing its first quantitative easing move of the week. The New York Federal Reserve purchased $7.5 billion worth of securities with maturity dates ranging from December of 2013 to April of 2016.
The day's buyback saw a total of $20.74 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $177.47 billion since the program began on March 25th.
In overseas trading, stock markets across the Asia Pacific region ended Monday's session showing moderate gains. Japan's benchmark Nikkei 225 Index closed up 0.4 percent, while Hong Kong's Hang Seng Index finished up 0.8 percent.
Meanwhile, the major European markets closed firmly on the downside. The French CAC 40 Index and the German DAX Index both finished down by 3 percent, while the U.K.'s FTSE 100 Index dropped by 2.6 percent.
In the bond markets, treasuries are continuing to show notable strength on the day. Subsequently, the yield on the benchmark ten-year note is trading at 3.702 percent, a drop of 8.7 basis points on the day.
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