RTTNews - Stocks are experiencing notable weakness on Monday, as traders are doing some profit taking following the recent strength in the markets. The major averages are all firmly in negative territory after a lower open, taking a breather amid a day free of any significant economic reports.
Packaged food supplier General Mills is in focus after the company said it is on track to exceed its prior earnings targets for the fiscal year ending May 31, 2009 due to good operating performance and a lower fourth-quarter tax rate.
The forecast, however, assumes no mark-to-market valuation as well as gains from asset sales. The company also provided its initial segmental sales outlook for 2010. The stock is up 3.9 percent in mid-morning trading.
Meanwhile, shares of fast food giant McDonald's Corp. (MCD) are moving after the company announced that its global comparable sales rose 5.1 percent in May 2009.
Shares of McDonald's (MCD) are currently down 2.6 percent, as U.S. sales came in well short of expectations. In the U.S., comparable sales grew 2.8 percent in May.
Meanwhile, a group of Indiana pension funds have filed an emergency appeal with the U.S. Supreme Court to delay the sale of bankrupt automaker Chrysler LLC to a group led by Italian automaker Fiat. The court's decision on whether to stay the closing of the deal is expected later today.
Additionally, the annual Apple Worldwide Developers Conference is also taking place in San Francisco, with the tech world hoping for a Steve Jobs sighting following reports last week indicating he will return to work later this month.
Some traders are looking to another quantitative easing move by the Federal Reserve this morning. The New York branch of the Fed is buying back treasuries with maturity dates ranging between December of 2013 and April of 2016, set to reveal the results of the purchase at 11:00 a.m. ET.
Some speculation has risen as to whether the Fed will raise interest rates to combat the effects of expected inflation following its quantitative easing actions.
In other news, standard & Poor's downgraded Ireland's credit rating for the second time this year, citing fears that the government is set to incur a higher-than-expected cost for supporting banks.
The major indices are all posting notable losses, although they have moved well off of their worst levels of the day in recent trading. The Dow is currently down 102.40 at 8,660.73, the Nasdaq is down 25.69 at 1,823.73 and the S&P 500 is down 8.81 at 931.28.
Most of the major sectors are in the red, contributing to the notable pullback by the major averages, which have partly offset last week's gains.
Gold stocks are turning in some of the day's worst performances, as reflected by the 2 percent pullback by the Amex Gold Bugs Index. With the retreat, the index continues to back off of ten ten-month high set earlier this month, as traders largely consider the late-May flight to commodities overdone.
Additional weakness is also present among airline stocks, with the Amex Airline Index down by 3 percent on the day.
The International Air Transport Association (IATA) said Sunday that the global airline industry will see wider than expected losses this year, as demand for travel and cargo traffic has dipped despite a decrease in air fares.
Steel, health insurance and computer hardware stocks are also posting notable declines. Among computer hardware stocks, Palm (PALM) is down 8.9 percent amid concerns about a lack of supply of its new Pre smart phone.
Meanwhile, banking stocks are bucking the downtrend, with the S&P Banks Index up by 2.3 percent on the day. The move comes as a number of the nation's leading financial institutions are gearing up to pay back government issued TARP funds.
Stocks Driven By Analyst Comments
Regal Entertainment (RGC) is sliding after the firm was downgraded at Merriman Curhan Ford from a Buy to a Neutral rating, with the analyst saying a pullback in box office sales could dampen quarterly results. Regal is down by 4.1 percent after falling to its worst intraday level in nearly three months earlier in the session.
Hovnanian (HOV) is also down following a rating cut by Wachovia from Market Perform to Underperform. The stock has dropped by 3.7 percent, falling back to intra-day levels last seen just under two weeks ago.
On the other hand, Scotts Miracle-Gro (SMG) is rising after BMO Capital Markets upgraded the stock to Outperform from Market Perform. Shares of the lawn care firm are up by 3.8 percent in mid-morning dealing, setting its best intra-day price in over two weeks.
In overseas trading, stock markets across the Asia-Pacific region finished Monday's session on a mixed note. Japan's benchmark Nikkei 225 Index rose by 1.0 percent, while Hong Kong's Hang Seng closed down by 2.3 percent.
Meanwhile, the major European markets are retreating by a considerable margin. The U.K.'s FTSE 100 Index is down by 1.0 percent, while the French CAC 40 Index and the German DAX Index are down by 1.7 percent and 1.5 percent, respectively.
In the bond markets, treasuries are holding in positive territory after seeing some volatility at the opening bell on Wall Street. Subsequently, the yield on the benchmark ten-year note is down to 3.826 percent, a drop of 3.6 basis points on the day.
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