Stocks Come Under Pressure As Key Events Loom - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have come under pressure over the course of the trading session on Monday. The pullback on the day comes after the major averages turned in a mixed performance last week.

The major averages have seen some further downside in recent trading, hitting new lows for the session. The Dow is down 66.11 points or 0.4 percent at 17,732.38, the Nasdaq is down 24.00 points or 0.5 percent at 5,103.52 and the S&P 500 is down 7.59 points or 0.4 percent at 2,082.52.

The weakness that has emerged on Wall Street may partly reflect uncertainty ahead of the release of several key events in the coming days, including the release of the Labor Department's monthly jobs report on Friday.

The jobs report, which is expected to show an increase of about 190,000 jobs in November, could have a significant impact on the outlook for interest rates.

Reports on manufacturing and service sector activity, private sector employment and international trade are also likely to attract some attention.

Federal Reserve Chair Janet Yellen is also scheduled to deliver two speeches this week, joining several other Fed officials that are due to give remarks.

Additionally, the European Central Bank is scheduled to hold a monetary policy meeting on Thursday, with many expecting the bank to provide further stimulus.

Traders are also reacting to the economic data released this morning, including a report from MNI Indicators showing an unexpected contraction in Chicago-area business activity in November.

The report said the Chicago Business Barometer tumbled to 48.7 in November from 56.2 in October, with a reading below 50 indicating a contraction in regional business activity. Economists had expected the index to 54.0.

MNI Indicators said the sharp drop by the business barometer is indicative of the see-saw pattern of demand seen in 2015, with output and orders shifting in and out of contraction.

The National Association of Realtors released a separate report showing a smaller than expected rebound in pending home sales in October.

NAR said its pending home sales index inched up by 0.2 percent to 107.7 in October from an upwardly revised 107.5 in September. Economists had expected the index to climb by 1.0 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Sector News

Despite the pullback by the broader markets, many of the major sectors continue to show only modest moves in mid-day trading.

Airline stocks have shown a significant move to the downside, however, with the NYSE Arca Airline Index falling by 1.4 percent. Allegiant Travel (ALGT) is leading the sector lower after Raymond James downgraded the stock to Market Perform from Outperform.

Health care and retail stocks have also come under pressure, with the Dow Jones Health Care Index and the Dow Jones Retail Index sliding by 1.1 percent and 1 percent, respectively.

On the other hand, gold stocks have moved sharply higher, driving the NYSE Arca Gold Bugs Index up by 2.4 percent. The strength in the sector comes as gold for December delivery is climbing $7.50 to $1,063.70 an ounce.

Notable strength has also emerged among energy stocks, which are moving higher as the price of crude oil for January delivery is rising $0.64 to $42.35 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index dropped by 0.7 percent, while Hong Kong's Hang Seng Index fell by 0.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index dipped by 0.3 percent, the French CAC 40 Index rose by 0.6 percent and the German DAX Index advanced by 0.8 percent.

In the bond market, treasuries are seeing modest strength after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by nearly a basis point at 2.217 percent.