RTTNews - After moving sharply lower in early trading, stocks remained mostly negative throughout the trading day on Monday. While the major averages did not see much follow-through on their initial downward move, they remained stuck in the red.

The weakness in the markets came as a sell-off in the Chinese stock market inspired some traders to cash in on recent strength. Nonetheless, selling pressure remained relatively subdued ahead of the release of some key economic data later this week.

Traders 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

The 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.

In corporate news, Walt Disney (DIS) announced that it has agreed to acquire Marvel Entertainment (MVL) in a stock and cash transaction. Marvel shareholders will receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own.

The major averages moved well off their lows going into the close, although they still ended the day firmly in negative territory. The Dow closed down by 47.92 points or 0.5 percent at 9,496.28, the Nasdaq fell by 19.71 points or 1 percent to 2,009.06 and the S&P 500 slipped by 8.31 points or 0.8 percent to close at 1,020.62.

Sector News

With the weakness in China contributing to a notable decline in commodities prices, resource stocks turned in some of the market's worst performances. Oil service stocks posted particularly steep losses, as the price of oil fell nearly $3 a barrel and slipped below the $70 a barrel level.

Within the oil service sector, Baker Hughes (BHI) plunged by 9.6 percent on the day, ending the session at a seven-week closing low. The loss by Bake Hughes comes after the company 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.

Despite the steep drop by the price of oil, significant weakness was also visible in the airline sector. The NYSE Arca Airline Index closed down 2.6 percent, pulling back further off the seven-month closing high set last Wednesday.

While housing, healthcare, semiconductor, and commercial real estate stocks also posted notable losses, some brokerage stocks bucked the downtrend by the broader markets. The NYSE Arca Securities Broker/Dealer Index closed up 1.1 percent, at an eleven-month closing high.

Dow Components

Alcoa (AA) helped to lead the Dow lower, posting loss of 3.6 percent on the day. Shares of the aluminum producer ended the session at their lowest closing price in a month.

Caterpillar (CAT) also posted a notable loss, declining by 3 percent. Despite the pullback, the stock remained stuck in a recent trading range.

Boeing (BA) also came under pressure, with shares of the airplane manufacturer slipping by 2.7 percent. The stock backed further off of the more than two-month closing high it set last Thursday.

Weakness was also present in shares of Disney (DIS), which retreated by 3 percent, falling further away from last week's ten-month high. The loss came after the firm announced that it has agreed to acquire Marvel Entertainment in a stock and cash transaction.

Bank of America (BAC), DuPont (DD) and Cisco (CSCO) also fell, while Procter & Gamble (PG) bucked the day's downtrend, posting a gain of 1.7 percent.

Travelers (TRV) and JP Morgan (JPM) also rose, advancing by 1.6 percent and 1.3 percent, respectively. Travelers moved to its highest closing price in eleven months, while JP Morgan continued to hover near a ten and a half month high set earlier this month.

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 saw notable strength amid the retreat on Wall Street. Subsequently, the yield on the benchmark ten-year note finished at 3.401 percent, posting a loss of 5.0 basis points.

Looking Ahead

This week, the market will have the opportunity to react to a series of economic reports, culminating with the August non-farm employment report on Friday.

On Tuesday, traders will look to the latest reading on the Institute for Supply Management's manufacturing index as well as data on pending home sales and construction spending. The reports are all set to be released at 10:00 a.m. ET.

For comments and feedback: contact editorial@rttnews.com