Stocks are showing considerable weakness during mid-morning trading on Monday, as investors react poorly to some negative news from the auto sector. Profit taking is also contributing to the weakness in the markets following recent gains.
The selling pressure comes after President Obama and his top advisers determined that neither General Motors (GM) nor Chrysler is viable and that taxpayers will not spend billions more to keep the pair of automakers open forever.
At the request of the White House, Rick Wagoner is stepping down as chairman and CEO of General Motors, with Fritz Henderson, GM president and chief operating officer, set to replace Wagoner as CEO.
The Obama administration will continue to provide operating funds for the next few weeks, but it has given both GM and Chrysler a final deadline, threatening bankruptcy if the beleaguered auto giants do not significantly increase their efforts to restructure their business.
In other news, President Obama will speak later before heading across the Atlantic to the London summit of the G20 group of industrialized and emerging economies.
Ensuring that there is concerted action around the globe to jump start economic growth and that we are advancing a regulatory reform agenda to ensure that this crisis never happens again will be the key messages of the London trip, White House Press Secretary Robert Gibbs said.
Optimism surrounding the G20 summit has waned, as investors fear that earlier hopes that the countries will agree to a coordinated fiscal boost appear to have been crushed by skepticism in many European governments.
Meanwhile, Biogen Idec (BIIB) said it has named Robert Hamm as its Chief Operating Officer, effective immediately. Hamm, who has been Executive Vice President, Pharmaceutical Operations & Technology since 2007, replaces Hans Peter Hasler, who is leaving the company.
The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is currently down 234.81 at 7,541.37, the Nasdaq is down 49.77 at 1,495.43 and the S&P 500 is down 23.86 at 792.08.
While banking stocks are turning in some of the day's worst performances, considerable weakness is also being shown by airline stocks, driving the Amex Airline Index down 5.7 percent so far.
Within the airline sector, Delta Air Lines (DAL) is suffering one of the widest losses of the session, pulling back well off the more than one-month closing high it set on Thursday with a 9.9 percent decline.
Housing, electronic storage, and networking stocks are also suffering considerable losses on the day. The Philadelphia Housing Index is down 5.8 percent, while the Amex Disk Drive Index and the Amex Networking Index are both down 5.7 percent.
Health insurance, brokerage, and real estate stocks are also posting noteworthy losses for the session. With the considerable weakness in the broader markets, the vast majority of the other major sectors are also showing significant declines on the day.
Stocks Driven By Analyst Comments
Quality Systems (QSII) is suffering a loss of 5.4 percent on Monday after the company was downgraded to Sell from Neutral at UBS. With the loss, the stock has pulled back further off the multi-year closing high it set last Thursday.
The downgrade came as UBS analysts expressed concerns about the stock's valuation amid expectations that the company is facing a volatile year. Additionally, insider selling has remained steady.
Potash (POT) is posting a 6.6 percent loss so far after being downgraded to Hold from Buy at Soleil. Analysts based the downgrade on short-term fertilizer demand destruction and longer-term lower potash prices.
Meanwhile, Church & Dwight (CHD) is bucking the downtrend with a modest gain after the stock was upgraded to Outperform at Oppenheimer. Analysts believe that the company should benefit as consumers trade down toward its value-oriented portfolio.
In overseas trading, stock markets across the Asia-Pacific region closed lower on Monday, with Japan's benchmark Nikkei 225 Index ending the session down 4.5 percent.
The major European markets are also suffering considerable weakness. The U.K.'s FTSE 100 Index is down 2.4 percent, while the French CAC 40 Index and the German DAX Index are posting losses of 3.5 percent and 3.6 percent, respectively.
In the bond market, treasuries are showing considerable strength, hovering near their intraday highs. Subsequently, the yield on the benchmark 10-year note is down 7.6 basis points at 2.685 percent.
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