RTTNews - Following this morning's sharp pullback, stocks continue to linger in negative territory in mid-afternoon trading on Monday, as traders are doing some profit taking amid a lack of significant market catalysts. The major averages remain in the red on another light volume trading day.

Traders have largely shrugged off the results of the Institute for Supply Management - Chicago's survey of regional manufacturing activity, which showed that activity unexpectedly reached neutral territory in August following ten consecutive months of contraction

Later this week, the markets will have better opportunities to evaluate the state of the ailing economy with the release of a series of significant economic reports, culminating with the August employment data on Friday.

With payrolls expected to decline by almost as much as they did in July, the unemployment rate is expected to tick up slightly in August, as economists don't expect a quick fix for the ravaged job market. The report is expected to show a decrease of about 225,000 jobs in August.

The major averages have moved in a tight range in recent trading, remaining near their lows of the day. The Dow is currently down 86.69 at 9,457.51, the Nasdaq is down 27.15 at 2,001.62 and the S&P 500 is down 11.96 at 1,016.97.

Dow Components

A majority of the Dow components are moving lower in mid-afternoon trading, contributing to the notable pullback in the blue chip index.

Boeing (BA) is helping to lead the Dow lower, with shares of the airplane manufacturer down by 3.4 percent on the day. The stock is backing further off of the more than two-month closing high it set last Thursday.

Alcoa (AA) and Caterpillar (CAT) are also under pressure, posting losses of 3.5 percent and 3.7 percent, respectively. Alcoa is poised to close at a one month low, while Caterpillar is continuing to trade within a recent trading range.

Weakness is also present in shares of Disney (DIS), which are retreating by 3.1 percent, falling further away from last week's ten and a half month high. The move comes after the firm announced that it has agreed to acquire Marvel Entertainment (MVL) in a stock and cash transaction.

DuPont (DD), Cisco (CSCO), American Express (AXP) and Home Depot (HD) are also showing notable declines, dragging the Dow lower for a second straight session.

Meanwhile, JP Morgan Chase (JPM) and Procter & Gamble (PG) are posting strong gains, advancing by more than 1 percent each.

Sector News

Resource stocks continue to linger firmly in negative territory after the morning's initial pullback, which came amid a drop in commodity prices.

Housing and airline stocks also continue to disappoint, with the Philadelphia Housing Sector Index and the NYSE Arca Airline Index falling by 2.3 percent and 2.7 percent, respectively. The housing index is backing off of the eleven-month closing high set last Friday and the airline index is falling further away from the seven and a half month closing high set last Wednesday.

Semiconductor stocks are also moving lower, with the Philadelphia Semiconductor Index posting a loss of 2 percent. The index is retreating from the eleven-month closing high set on Friday.

The move comes despite news from the Semiconductor Industry Association that semiconductor sales rose by 5 percent in July compared to the previous month. Nonetheless, sales are down by 18 percent compared to the same period last year.

While railroad, housing, commercial real estate and healthcare related stocks are also moving to the downside, modest strength has emerged among brokerage stocks. The NYSE Arca Securities/Brokerage Index is up by 0.7 percent, looking to close at a fresh eleven-month high.

In Focus: Chicago PMI, Merger News

As mentioned above, the ISM - Chicago said its index of manufacturing activity rose to 50.0 in August from 43.4 in July, with a reading of 50 acting as the breakeven point versus contraction and expansion. Economists had been expecting a more modest increase to a reading of 48.0.

The improvement in the sector reflected a turnaround in both production and new orders, with the production index jumping to 52.9 in August from 43.3 in July and the new orders index rising to 52.5 from 48.0 in the previous month.

At the same time, the report showed a continued contraction in employment. While the employment index rose to 38.7 in August from 35.3 in July, it remained below the key 50 level.

On the corporate front, Baker Hughes (BHI) said it has agreed to acquire BJ Services (BJS) in a deal valued at about $5.5 billion. Under the terms of the deal, BJ Services stockholders will receive 0.40035 shares of Baker Hughes and $2.69 in cash for each share of BJ Services common stock.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower to start the week. Japan's benchmark Nikkei 225 Index slipped by 0.4 percent, while Hong Kong's Hang Seng Index fell by 1.9 percent.

The major European markets also fell, with the French CAC 40 Index and the German DAX Index slipping by 1.1 percent and 1 percent, respectively, while the U.K. market was closed today for a bank holiday.

In the bond markets, treasuries are seeing notable strength amid the retreat on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.399 percent, posting a loss of 5.2 basis points.

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