RTTNews - Equities are extending their weakness in mid-afternoon trading on Monday, although selling pressure has waned somewhat from earlier in the session. The major averages have moved off of their worst levels of the day, but they continue to tread in negative territory.
Traders are doing some profit taking after the recent rally, as there is no significant economic news on the day to drive trading.
In an interview with RTT News, Peter Cardillo, chief market economist at Avalon Partners said, The market has gotten a little ahead of itself here and it needs to rest.
That's not it for the green arrows though, he said, adding, I'm cautiously optimistic that the rally will continue during the summer months.
I think we're in the second leg of the bull run, Cardillo said, though when asked if this is a bull market, he said, I'm not sure of that just yet.
The major averages moved roughly sideways in recent trading, holding their position in the red. The Dow is currently down 80.79 at 8,682.34, the Nasdaq is down 20.74 at 1,828.68 and the S&P 500 is down 8.56 at 931.53.
Most Dow components are showing notable weakness in mid-afternoon trading, helping to keep the blue chip index firmly in negative territory.
The Dow is being led lower by shares of DuPont (DD), which are down by 3.6 percent on the day. With the retreat, shares of the chemical giant have slipped to their worst intraday level in seven weeks.
Shares of McDonald's (MCD) are also slipping after the company announced that its global comparable sales rose 5.1 percent in May 2009. Shares of McDonald's are currently down by 2.3 percent, giving back recent gains. The decline comes as U.S. sales came in well short of expectations, growing by 2.8 percent in May while analysts expected 3.8 percent.
In addition, shares of Pfizer (PFE), 3M (MMM) and Alcoa (AA) are also retreating by notable margins. New Dow members Cisco (CSCO) and Travelers (TRV) are seeing a lackluster outing, falling by 1.2 percent and 0.5, percent, respectively.
Despite the broad-based losses, financial giants JP Morgan Chase (JPM), Bank of America (BAC) and American Express (AXP) are on the rise. The climb comes as the firms gear up to pay back government issued TARP funds, using recently raised capital from a series of equity offerings.
Most of the major sectors are exhibiting weakness, helping to keep the major averages in negative territory.
Internet related stocks are firmly on the downside, with the Amex Internet Index posting a 2.1 percent loss in mid-afternoon dealing. The index has pulled back well off of the eight months high set in the previous session.
VeriSign (VRSN) is leading the way lower, falling by 14.7 percent on the day. At its low for the session, shares of VeriSign were at their worst intraday level in over a month.
Health insurance stocks and airline stocks are also extending their losses, with the Morgan Stanley Healthcare Payor Sector Index and the Amex Airline Index falling by 3.7 percent and 3.1 percent, respectively.
Gold, steel, oil service, and natural gas stocks are also showing weakness, reflecting a recoil in commodity prices on the NYMEX.
Meanwhile, banking stocks are some of the few gainers on the day, with the S&P Banks Index up by 1.8 percent on the day.
In Focus: Corporate News, Fed Buyback, Stimulus Spending
Packaged food supplier General Mills (GIS) 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 4.1 percent in mid-afternoon trading.
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 is expected by 4:00 p.m. ET today.
Additionally, the annual Apple Worldwide Developers Conference has kicked off in San Francisco, with Apple (AAPL) announcing a new web browser, remodeled MacBook and a fresh operating system.
The Federal Reserve continued its treasury buyback program Monday, completing the first of two quantitative easing moves for the week. The New York arm of the Federal Reserve purchased $7.50 billion worth of securities with maturity dates ranging from December of 2013 to April of 2016.
The day's buyback saw a total of $29.97 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $153.02 billion since the program began on March 25th.
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.
Meanwhile, President Barack Obama is ramping up the economic stimulus spending, pledging to create over 600,000 jobs this summer. Obama made the announcement Monday morning, stating that he will accelerate the implementation of the $787 billion stimulus in the next 100 days.
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.
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 finished notably lower. The U.K.'s FTSE 100 Index closed down by 0.8 percent, while the French CAC 40 Index and the German DAX Index fell by 1.5 percent and 1.4 percent, respectively.
In the bond markets, treasuries have ceded earlier gains and are now seeing modest weakness. Subsequently, the yield on the benchmark ten-year note is up to 3.897 percent, a climb of 3.5 basis points on the day.
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