RTTNews - After plunging at the open, stocks are seeing considerable weakness in mid-morning trading on Monday, as trader concern over the imminence of an economic recovery has sparked a sell-off in equities. The major averages are all in negative territory by substantial margins, adding to the modest losses posted last week.

The retreat comes after last week's disappointing consumer sentiment and retail sales data suggested that an economic recovery is further away than the markets had anticipated. Concerns about the outlook for the global economy contributed to considerable weakness in the overseas markets, with China's Shanghai Composite Index falling nearly 6 percent

Selling pressure was also precipitated by news that Lowe's (LOW) reported second quarter net earnings of $0.51 per share compared to $0.63 per share in the same period last year. Wall Street expected the company to earn $0.54 per share for the quarter. The home improvement retailer also provided disappointing guidance.

Some of the pessimism was mitigated by the release of a report from the Federal Reserve Bank of New York showing that conditions for New York manufacturers improved for the first time in well over a year in the month of August.

The New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.

In other news, online broker Charles Schwab (SCHW) is in focus after the company revealed that it would vigorously defend itself in court against allegations by New York Attorney General Andrew Cuomo regarding the company's sale of Auction Rate Securities, or ARS, to retail clients.

According to reports, China Investment Corp. is planning to pump around $2 billion into the U.S. mortgage system by hiring mandates under the U.S. Treasury-backed Public-Private Investment Plan or PPIP.

The major averages have moved roughly sideways since reaching their worst levels of the day earlier. The Dow is currently down 170.49 at 9,145.77, the Nasdaq is down 47.17 at 1,938.35 and the S&P 500 is down 21.16 at 982.93.

Sector News

Nearly all off the major sectors are moving lower, contributing to the notable weakness in equities in mid-morning trading.

Some of the day's worst performances have come from the resource sector, with steel and gold stocks slipping by considerable margins. The NYSE Arca Steel Index and the NYSE Arca Gold Bugs Index are down by 5.9 percent and 4.8 percent, respectively. With the declines, the indices have fallen to their worst intraday levels in three weeks.

Airline stocks are also retreating, as reflected by the 3.8 percent loss being shown by the NYSE Arca Airline Index. The slide is pulling the index further away from the roughly seven-month closing high set last Thursday.

The index is being hurt by shares of UAL Corp. (UAUA), which are down by 5.3 percent on the day. With the move, the stock is backing off of last week's three and half month closing high.

Housing, commercial real estate and railroad stocks are also moving sharply lower, while health insurance stocks are bucking the day's downtrend. The Morgan Stanley Healthcare Payor Index is up by 4.7 percent, reaching its best intraday level in ten months.

Stocks Driven By Analyst Comments

Shares of BJ's Wholesale (BJ) are sliding in mid-morning trading following a downgrade by JP Morgan Chase to Neutral from Overweight. The broker also lowered its target price to $34 from $41. The stock is down by 2.7 percent, hitting a five-month intraday low earlier in the session.

GameStop (GME) is also retreating after an analyst at Wedbush Morgan predicted that the firm's second quarter revenues would fall short of initial forecasts and that the company would have to lower its guidance as a result. The stock is falling by 3.8 percent, backing off of its best closing level in nearly three months.

On the other hand, Gartner (IT) is on the rise after being upgraded by JP Morgan to Overweight from Neutral. The broker also raised its target price on the stock to $23 from $17. Shares of the research and advisory firm are gaining by 3.1 percent, moving off of a one-month closing low set late last week.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished considerably lower on Monday. Japan's benchmark Nikkei 225 Index slid by 3.1 percent, while Hong Kong's Hang Seng Index fell by 3.6 percent.

The major European markets are also moving lower, with the French CAC 40 Index and the German DAX Index down by 2.1 percent and 1.8 percent, respectively, while the U.K.'s FTSE 100 Index is down by 1.6 percent.

In the bond markets, treasuries are posting strong gains amid the pullback on Wall Street. Subsequently the yield on the benchmark ten-year note is trading at 3.502 percent, posting a loss of 5.6 basis points on the day.

For comments and feedback: contact editorial@rttnews.com