After showing a notable downward move over the course of morning trading on Monday, stocks are seeing continued weakness in the mid-afternoon. The major averages are lingering firmly in negative territory, as news on the corporate front has kept investors wary of entering the market.
In an interview with RTT News, Joseph Saluzzi, co-head of equity trading at Themis Trading, said the market's pullback is to be expected because we ran too far too fast.
It was certainly an overbought condition, said Saluzzi who predicted that the market would continue to sink lower. I certainly think we hit the lows again.unless we start to see some real fundamental news.
Saluzzi classified the latest run higher as a bear market rally, no doubt and warned investors, The black swan is still out there.we just don't know where it is.
Sun Microsystems (JAVA) is suffering considerable weakness after media reports said that acquisition talks between IBM (IBM) and Sun have collapsed, putting the deal at risk of failure. Shares of Sun are currently down 22 percent.
The reports said that Sun's board rejected a formal acquisition offer by IBM on Saturday, sending a notice terminating Sun's deal to hold talks exclusively with IBM. In response, IBM reportedly withdrew its offer to acquire Sun on Sunday.
Additionally, the banking sector has come under pressure after veteran banking analyst Mike Mayo initiated coverage on many banks at Sell or Underperform.
Meanwhile, President Barack Obama told Turkish lawmakers Monday that he stood behind their bid to join the European Union. The president also stressed that the U.S. remains a friend to the Muslim world, even as the country fights Islamic terrorism.
In other news, the U.S. Treasury Department has extended the deadline for applications to its public-private initiative to buy up distressed assets from banks. The deadline has been pushed out two weeks until April 24.
The treasury's program allows fund managers to participate with the government in an initiative aimed at taking distressed assets off the balance sheets of banks. These assets have become nearly impossible to sell since the financial turmoil that set in last year, forcing banks to announce huge write-offs and putting the overall financial system in jeopardy.
While the major averages currently remain firmly in negative territory, they have moved well off their worst levels of the day. The Dow is currently down 101.71 at 7,915.88, the Nasdaq is down 29.96 at 1,591.91 and the S&P 500 is down 14.17 at 828.33.
A vast majority of the Dow components are trading in negative territory, contributing to the steep loss by the blue chip index. JP Morgan (JPM) is turning in one the Dow's worst performances, falling 5 percent after ending the previous session at a neatly six-month closing high.
Alcoa (AA) and Caterpillar (CAT) are also posting considerable losses on the day, falling 4.8 percent and 4.2 percent, respectively.
Citigroup (C), American Express (AXP), and Boeing (BA) are also showing noteworthy weakness for Monday's session.
At the other end of the spectrum, General Motors (GM) is turning in a strong performance, with the auto giant currently up 7.1 percent. Merck (MRK) and Pfizer (PFE) are posting more modest gains.
Most of the major sector indices are continuing to post considerable losses on the session. While computer hardware stocks are continuing to lead the downward momentum, notable weakness is also coming out of the steel sector.
The Amex Steel Index is down 4.6 percent so far. Within the index, Rio Tinto (RTP) is posting a loss of 11.8 percent, dragging the stock down off the four-month closing high it set on Friday.
Gold, oil services, and railroad stocks are also showing considerable weakness, with the Amex Gold Bugs Index down 4.7 percent, while the Philadelphia Oil Services Index and the Dow Jones Railroads Index are down 3.7 percent and 4.2 percent, respectively.
Meanwhile, airline and health insurance stocks remain some of the only gainers of the session. The Amex Airline Index is up 2 percent, while the Morgan Stanley Healthcare Payor Index is up 1.2 percent.
In overseas trading, stock markets across the Asia-Pacific region ended the day higher, shrugging off news of a rocket launch by North Korea on Sunday. Japan's benchmark Nikkei 225 Index ended the day up 1.2 percent.
Meanwhile, the major European markets ended the session lower. The U.K.'s FTSE 100 Index closed down 0.9 percent, while the French CAC 40 Index and the German DAX Index ended the session with losses of 1 percent and 0.8 percent, respectively.
In the bond market, treasuries have shown a lack of direction over the course of the trading day, bouncing back and forth across the unchanged line. The yield on the ten-year note is currently up 1.7 basis points at 2.924 percent.
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