RTTNews - Following a string of largely lackluster performances, stocks are retreating by considerable margins in mid-morning trading on Monday. The major averages are all firmly in negative territory as traders consider a murky near-term economic outlook.
The weakness in the markets is partly due to news that the World Bank has reduced its global GDP estimate as well as the outlook for most other economies and warned of a large decline in international capital flows amidst financial market fragility and recession.
The Washington-based lender now expects the world economy to shrink by 2.9 percent this year, larger than its earlier prediction of a 1.7 percent decrease.
On the earnings front, drug store retailer Walgreen (WAG) reported third-quarter earnings that fell to $0.53 per share from $0.58 per share in the year-ago quarter, coming below analyst estimates of $0.56 per share. The stock is down by 4 percent as traders react to the news.
Shares of Marvell Technology (MRVL) have also turned lower even though the chip maker raised its second quarter revenue guidance, citing an improvement in demand. The company now expects revenues of $600 to $630 million compared to its previous guidance of $540 to $580 million.
In other news from the tech sector, Apple Inc. (AAPL) announced that it has sold over one million iPhone 3GS models through Sunday, June 21, the third day after its launch. The company said that six million customers have downloaded the new iPhone 3.0 software in the first five days since its release.
Meanwhile, Anglo-Swiss mining company Xstrata has approached rival Anglo American, seeking their consideration regarding a merger of the two companies. If accepted, the merger would create the third largest mining firm in the world.
The major averages have seen some further downside in recent trading, falling to new lows for the session. The Dow is currently down 137.24 at 8,402.49, the Nasdaq is down 45.81 at 1,781.66 and the S&P 500 is down 19.32 at 901.91.
Most of the major sectors have shown notable moves to the downside, contributing to the considerable breadth of the day's losses.
Gold stocks are experiencing a notable pullback, as reflected by the 5.4 percent retreat by the NYSE Arca Gold Bugs Index. With the decline, the index continues to offset recent gains, falling to a one-month low after hitting a ten-month higher in early June.
Other resource stocks are also suffering on the day, with significant weakness emerging among steel, oil service and natural gas stocks. The NYSE Arca Steel Index, the Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index have all slipped to their worst levels in roughly a month.
The downward move has been precipitated by a drop in commodity prices on the NYMEX, with the price of oil falling $1.65 to $67.90 a barrel.
Trucking, railroad, banking and healthcare-related stocks are also showing notable moves to the downside, reflecting the day's broad based weakness.
Stocks Driven By Analyst Comments
Shares of CarMax (KMX) are down in morning trading after Deutsche Securities downgraded its rating on the company's stock to Hold from Buy. Shares of used car retailer are down by 5.9 percent, backing off of the nine-month high set in the previous session.
Thomson Creek Metals (TC) is also sliding, prompted by a ratings change to Hold from Buy at Deutsche Bank. The stock is down by 6.9 percent on the day, extending its losses and continuing to pull back off its best level in more than eight months.
On the other hand, Bob Evans Farms (BOBE) is on the upside following an upgrade to Buy from Hold by KeyBanc Capital Markets, which cited improving pricing conditions for sow. The stock is up by 1.8 percent, hovering near its best level in nearly a year.
In overseas trading, stock markets across the Asia Pacific region ended Monday's session showing moderate gains. Japan's benchmark Nikkei 225 Index closed up 0.4 percent, while Hong Kong's Hang Seng Index finished up 0.8 percent.
Meanwhile, the major European markets are sliding by significant margins, with the French CAC 40 Index and the German DAX Index down by 2.5 percent and 2.2 percent, respectively. The U.K.'s FTSE 100 Index is down by 1.9 percent.
In the bond markets, treasuries are in positive territory but have moved off of their best levels of the day in recent trading. Subsequently, the yield on the benchmark ten-year note is trading at 3.742 percent, a drop of 4.7 basis points on the day.
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