RTTNews - Stocks remain firmly negative in early afternoon trading on Monday, although some upbeat news from the manufacturing sector and light trading is limiting the day's losses. The major averages are stuck in the red after moving off of their morning lows earlier in the session.
Amid a relatively light day on the economic front, traders looked to the results of the Institute for Supply Management - Chicago's survey on manufacturing activity in the Chicago-area. The results unexpectedly reached neutral territory in August following ten consecutive months of contraction, which helped to moderate some earlier losses in the equity markets.
Looking ahead to the rest of the week, the market will have the opportunity to gauge the health of the economy via a series of economic reports, culminating with the August employment data on Friday.
With payrolls expected to decline by almost as much as they did in July, the unemployment rate is expected to tick up slightly in August, as economists don't expect a quick fix for the ravaged job market. The report is expected to show a decrease of about 225,000 jobs in August.
The major averages have remained more or less rangebound in recent trading, lingering firmly in negative territory. The Dow is currently down 86.76 at 9,457.44, the Nasdaq is down 24.78 at 2,003.99 and the S&P 500 is down 11.75 at 1,017.18.
Resource stocks continue to turn in some of the worst performances in early afternoon trading, with oil service, gold, steel and natural gas stocks all posting sharp losses.
The weakness among resource stocks comes amid a decline in commodities prices on the NYMEX, where oil is down by $3.45 at $69.29 barrel. Gold is falling by $7.20 and is now valued at $951.60 an ounce.
Airline stocks are also down by substantial margins, with the NYSE Arca Airline Index down by 2.1 percent on the day. The index is backing further away from the seven and a half month closing high set last Wednesday.
US Airways Group (LCC) is leading the sector, falling 4.5 percent and pulling back further off last Wednesday's nearly four-month closing high.
Housing and commercial real estate stocks are also moving to the downside, with the Philadelphia Housing Sector Index and the Morgan Stanley REIT Index posting losses of 2.2 percent and 2.1 percent, respectively. The housing index is backing off of the eleven month closing high set last Friday.
Electronic storage, semiconductor, and healthcare-related stocks are also posting steep losses, reflecting the day's broad-based weakness.
Stocks In The News
Shares of Cooper Industries (CBE) are moving lower amid news that the firm will be removed from the S&P 500 and replaced by Airgas (ARG). Shares of Cooper Industries are posting a loss of 4.7 percent, but they remain stuck in a recent trading range.
On the other hand, Crosstex Energy LP (XTEX) is moving higher after announcing an agreement to sell a natural gas treating business owned by itself and partner Crosstex Energy Inc. (XTXI) to Kinder Morgan (KMP) for $266 million. Despite the 5.7 percent gain, the stock has been unable to break out of a recent trading range.
In Focus: Chicago PMI, Merger News
The ISM - Chicago said its index of manufacturing activity rose to 50.0 in August from 43.4 in July, with a reading of 50 acting as the breakeven point versus contraction and expansion. Economists had been expecting a more modest increase to a reading of 48.0.
On the corporate front, Baker Hughes (BHI) said it has agreed to acquire BJ Services (BJS) in a deal valued at about $5.5 billion. Under the terms of the deal, BJ Services stockholders will receive 0.40035 shares of Baker Hughes and $2.69 in cash for each share of BJ Services common stock.
Separately, Walt Disney (DIS) announced that it has agreed to acquire Marvel Entertainment (MVL) in a stock and cash transaction. Marvel shareholders will receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own.
In overseas trading, stock markets across the Asia-Pacific region closed mostly lower to start the week. Japan's benchmark Nikkei 225 Index slipped by 0.4 percent, while Hong Kong's Hang Seng Index fell by 1.9 percent.
The major European markets also fell, with the French CAC 40 Index and the German DAX Index slipping by 1.1 percent and 1 percent, respectively, while the U.K. market was closed today for a bank holiday.
In the bond markets, treasuries are seeing modest strength amid the retreat on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.427 percent, posting a loss of 2.4 basis points.
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