While selling pressure has waned from earlier in the session, stocks are seeing continued weakness in early afternoon trading on Monday. The major averages are all in negative territory, although the Nasdaq is posting a relatively modest loss.
The weakness in the markets comes as traders cash in on the market's recent gains, with the steep losses being shown by the Dow and the S&P 500 coming after they ended Friday's trading at their best closing levels in four months.
Uncertainty about the outlook for the markets has inspired some of the profit taking, with some traders questioning whether stocks can extend their recent upward move amid expectations of a lack of significant catalysts in the near future.
Nonetheless, there are some key economic reports due to be released later in the week, including reports on retail sales, industrial production, and producer and consumer price inflation. Traders are also likely to keep a close eye on the weekly jobless claims report.
Later in the day, trading could be impacted by a speech by President Barack Obama, who is scheduled to deliver remarks on his plan to reform the health care system.
At a meeting with the President, representatives of the health care industry were expected to tell Obama that they would voluntarily slow their rate increases in coming years, reducing health care costs by as much as $2 trillion over the next ten years.
Obama is expected to call the plan an unprecedented commitment by health care organizations to put aside their differences and work toward fixing the health care system.
In other news, The New York Federal Reserve continued its treasury buyback program Monday as part of its efforts to thaw the credit markets by injecting capital into the U.S. economy.
The New York Fed purchased $3.51 billion worth of securities with maturity dates ranging from August of 2026 to February of 2039. The day's buyback attracted strong interest, with a total of $10.43 billion in treasuries submitted for the purchase.
With the purchase, the government has bought back $95.71 billion in treasuries since the purchase program began on March 25.
While the Dow and the S&P 500 remain firmly in negative territory, the Nasdaq is currently just below the unchanged line. The Nasdaq is currently down 2.63 at 1,736.37, while the Dow is down 116.37 at 8,458.28 and the S&P 500 is down 15.17 at 914.06.
Ahead of the remarks from President Obama, health insurance stocks are turning in some of the worst performances. The Morgan Stanley Healthcare Payor Index is currently down 4.4 percent, pulling back well off the seven-month closing high it set last Friday.
WellCare Health Plans (WCG) is turning in one of the sector's worst performances after the company reported a first quarter loss versus a year-ago profit, although it reported adjusted earnings that exceeded analyst estimates. Shares of WellCare are currently down 9.6 percent.
Oil service stocks are also seeing considerable weakness amid a notable decrease by the price of crude oil. With crude for June delivery currently down $0.63 at $58 a barrel, the Philadelphia Oil Service Index is down 4.1 percent.
Despite the decrease by the price of oil, transportation stocks are also under pressure, as reflected by the 3.3 percent loss being shown by the Dow Jones Transportation Average. YRC Worldwide (YRCW), Ryder (R), and CSX (CSX) are posting notable losses.
While brokerage, real estate, and defense stocks are also posting notable losses, healthcare provider stocks are bucking the downtrend. The Morgan Stanley Healthcare Provider Index is currently up 1.9 percent amid strong gains by Health Management (HMA) and Tenet (THC).
Some software and biotechnology stocks are also posting strong gains, helping to limit the downside for the tech-heavy Nasdaq.
Stocks In The News
After trending higher in recent sessions, shares of CBS Corp. (CBS) are seeing considerable weakness in early afternoon trading. The mass media company is currently down 8.3 percent after ending last Friday's trading at a four-month closing high.
The loss by CBS comes after the company said it is offering $400 million of 8.2 percent senior notes due 2014 and $350 million of 8.875 percent senior notes due 2019. CBS intends to use the proceeds to fund its offer to purchase its outstanding 7.7 percent senior notes due 2010.
Shares of Windstream (WIN) are also moving lower after the company said it has entered into a definitive agreement to acquire D&E Communications (DECC) for $330 million. Windstream is currently down 2.7 percent after setting a three-month closing high last Friday.
On the other hand, shares of PMI Group (PMI) are currently up 38.7 percent after the mortgage insurance company reported a narrower than expected first quarter loss. At its high for the session, PMI was at a six-month intraday high.
In overseas trading, profit taking contributed to weakness among most of the stock markets across the Asia-Pacific region. However, modest strength was visible among Japanese stocks, with Japan's benchmark Nikkei 225 Index closing up 0.2 percent.
The major European markets also ended the day in the red, with the U.K.'s FTSE 100 Index closing down 0.6 percent, while the French CAC 40 Index and the German Index fell 1.9 percent and 1 percent, respectively.
In the bond market, treasuries are benefiting from the weakness among stocks, as traders move their money in the relative safety of bonds. Subsequently, the yield on the benchmark ten-year note is currently down 7.8 basis points at 3.215 percent.
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