RTTNews - Stocks are seeing substantial weakness in mid-morning trading on Monday, as traders cash in on recent gains amid some uncertainty about the market's ability to sustain its recent upward move. The major averages have all moved firmly into negative territory.
The weakness in the markets is partly due to steep losses by resource stocks, which are moving back to the downside along with commodities prices. Crude oil futures are currently down $1.14 at $70.90 a barrel after reaching a multi-month high last week.
Some strength in the value of the U.S. dollar is contributing to the pullback by commodities, with the greenback benefiting from comments from Russian Finance Minister Alexei Kudrin.
Speaking on the sidelines of a meeting of the Group of Eight finance ministers in Italy, Kudrin said his country has full confidence in the U.S. dollar, adding that the dollar's role as the main reserve currency was unlikely to change in the near future.
Kudrin's comments expressing confidence in the dollar come just days after Russian President Dmitry Medvedev questioned its global status, joining China's central bank Governor Zhou Xiaochuan in suggesting the world may need another benchmark for settling international debts.
On the economic front, a report from the New York Federal Reserve showed a continued deterioration in conditions for New York manufacturers in the month of June, with the index of activity in the sector falling by much more than expected.
The New York Fed said its general business conditions index fell to a negative 9.4 in June from a negative 4.55 in May, with a negative reading indicating a deterioration in conditions. Economists had expected the index to edge down to a negative 5.10.
While the index fell by more than economists had been expecting, it remains well above the record low of negative 38.2 set in March.
Peter Boockvar, equity strategist at Miller Tabak said, Although the data reflects more stabilization at weak levels rather than improvement, the 6-month outlook rose to 47.8 from 43.8, the highest since July '07 on the hope that less bad will soon turn to good.
In corporate news, shares of Cemex (CX) are moving notably lower after the building materials supplier said it has reached an agreement to sell its Australian operations to Switzerland-based building materials group Holcim Group for about 2 billion Australian dollars.
The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is currently down 158.71 at 8,640.55, the Nasdaq is down 36.48 at 1,822.32 and the S&P 500 is down 17.00 at 929.21.
Most of the major sectors have shown notable moves to the downside over the course of the morning, reflecting broad based weakness in the markets.
As mentioned above, resource stocks are turning in some of the worst performances amid the drop in commodities prices, with steel stocks posting particularly steep losses. The Amex Steel Index is down 4.7 percent, pulling back further off last Thursday's eight-month closing high.
Within the steel sector, Olympic Steel (ZEUS) is helping to lead the way lower after showing a substantial upward move last week. Shares of Olympic Steel are currently down 7.1 percent after ending Friday's trading at their best closing level in well over eight months.
Significant weakness has also emerged among healthcare provider stocks, as reflected by the 3 percent loss currently being shown by the Morgan Stanley Healthcare Provider Index. With the loss, the index is pulling back further off the eight-month high it set earlier this month.
MedCath (MDTH) and Health Management Associates (HMA) are turning in two of the sector's worst performances, falling by 8.1 percent and 5.1 percent, respectively.
Transportation stocks have also moved sharply lower over the course of the morning, dragging the Dow Jones Transportation Average down 3.7 percent. Health insurance, real estate, and biotechnology stocks are also among some of the worst performers on the day.
Stocks Driven By Analyst Comments
After trending higher in recent sessions, shares of Bank of Ireland (IRE) have come under considerable selling pressure in morning trading. The financial services provider is currently down 15.5 percent after ending Friday's trading at a nearly eight-month closing high.
The loss by Bank of Ireland comes after Deutsche Bank downgraded its rating on the company's stock to Hold from Buy. Deutsche Bank attributed the downgrade to concerns about the stock's valuation following the recent rally.
Shares of Rowan Cos. (RDC) have also shown a notable move to the downside after Credit Suisse downgraded its rating on the oil services provider to Underperform from Neutral. Rowan is currently down 7.4 percent, pulling back further off the eight-month high it set last Thursday.
On the other hand, shares of Netgear (NTGR) are currently up 3.9 percent after Deutsche Bank upgraded its rating on the communications equipment maker to Hold from Sell. At its high for the session, Netgear was at its best intraday level in over a month.
In overseas trading, stock markets across the Asia Pacific region ended Monday's trading mostly lower, as traders cashed in on recent gains. Japan's benchmark Nikkei 225 Index ended the day down nearly 1 percent.
The major European markets are also under pressure, with the French CAC 40 Index and the German DAX Index receding 2.1 percent and 2.4 percent, respectively, while the U.K.'s FTSE 100 Index is down 1.9 percent.
In the bond market, treasuries are seeing considerable strength amid the comments from the Russian Finance Minister and the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note is currently down 7.1 basis points at 3.717 percent.
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