RTTNews - Stocks kicked off the week with a disappointing outing on Monday, as traders expressed renewed concerns about the economic outlook ahead of the release of key figures later this week. The major averages all finished firmly in negative territory, extending their recent weakness.
The day's pullback was largely sparked by news that the World Bank cut its forecast for the global economy and warned of a large decline in international capital flows amidst financial market fragility.
The World Bank said it 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 in below analyst estimates of $0.56 per share. The stock closed down 5.7 percent as traders reacted to the news.
Shares of Marvell Technology (MRVL) also finished 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 also said that six million customers have downloaded the new iPhone 3.0 software in the first five days since its release.
Meanwhile, 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 other news, President Barack Obama announced an agreement with the pharmaceutical industry that aims to reduce Medicare drug costs. Separately, the president signed a bill that allows the Food and Drug Administration to regulate tobacco products.
The major indices all closed sharply lower, accelerating their slide in late trading. The Dow finished down by 200.72 points or 2.4 percent at 8,339.01, the Nasdaq fell by 61.28 points or 3.4 percent to 1,766.19 and the S&P 500 dropped 28.19 points or 3.1 percent to 893.04.
Resource stocks led the way lower, with the NYSE Arca Steel Index and the Philadelphia Oil Service Index closing down by 9 percent and 6.9 percent, respectively. Gold stocks also came under pressure, as reflected by the 6.4 percent retreat shown by the NYSE Arca Gold Bugs Index.
The recoil in resource related stocks came amid a drop in commodity prices, with crude oil declining $2.62 to $66.93 per barrel, while gold plummeted $15.20 to $921 an ounce.
Banking stocks also saw notable declines on the day, with the Kbw Banking Index slipping by 6.7 percent for the session. With the decline, the index closed at its lowest level in seven weeks.
Commercial real estate, airline, healthcare and chemical stocks are also ceded notable ground, further reflecting the day's assortment of losses.
A majority of the Dow components pulled back by considerable margins, contributing to the triple digit loss posted by the blue chip index for the day.
One of the Dow's worst performers was Alcoa (AA), which fell by 8.9 percent on the session. With the loss, shares of the aluminum manufacturer pulled back further off of the five-month high set earlier this month.
Financial service stocks also slid on the day, led by Bank of America (BAC), which fell by 9.7 percent. JP Morgan Chase (JPM) and American Express (AXP) are also posted notable losses, falling by 6.1 percent and 5.7 percent, respectively.
General Electric (GE) also declined by a steep margin, with shares of the diversified conglomerate dropping by 4.8 percent. The day's retreat dragged the stock down to its worst closing level in nine weeks.
Weakness was also visible in shares of Caterpillar (CAT), Disney (DIS), and DuPont (DD), further indicative of the variety of losses in today's session. Notably, DuPont moved lower by 3.5 percent and closed at its lowest price in nearly three months.
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 closed notably higher. Subsequently, the yield on the benchmark ten-year note finished at 3.693 percent, a drop of 9.6 basis points on the day.
Trading on Tuesday is likely to be impacted by the release of the National Association of Realtors' report on existing home sales. Economists expect the annual rate to climb to 4.82 million in May from 4.68 million in April. The report is set to be released at 10:00 a.m. ET.
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