Stocks Continue To Post Steep Losses In Mid-Day Trading - U.S. Commentary

(RTTNews) - After falling sharply at the start of trading, stocks continue to see substantial weakness in mid-day trading on Monday. With the weakness on the day, the Dow has slid into negative territory for the year.

In recent trading, the major averages have climbed off their worst levels of the day, but they remain firmly in the red. The Dow is down 193.95 points or 1.1 percent at 17,752.73, the Nasdaq is down 62.34 points or 1.2 percent at 5,018.16 and the S&P 500 is down 22.82 points or 1.1 percent at 2,078.67.

The sell-off on Wall Street comes as the latest round of talks between Greece and its creditors broke down over the weekend.

Greek Prime Minister Alexis Tsipras subsequently called for a referendum on the bailout proposals by creditors on July 5th.

The country is required to make a 1.6 billion euro payment to the IMF on June 30th, and the Greek Prime Minister is seeking to get an extension until the referendum.

With the European Central Bank opting to freeze the emergency liquidity assistance for Greek banks in the wake of the referendum call, Greece decided to close its banks and imposed capital controls.

Long lines have been witnessed at ATMs across Greece, as customers have been limited to withdrawals of 60 euros per day.

"The Greek Government's decision to call a referendum has elevated the crisis to a higher level," said Jonathan Loynes, Chief European Economist at Capital Economics. "While a deal may yet come together, a near-term Grexit now seems more likely than not."

Amid the focus on Greece, traders have largely shrugged off a report from the National Association of Realtors showing U.S. pending home sales climbed to a nine-year high in May.

NAR said its pending home sales index climbed 0.9 percent to 112.6 in May from a slight downward revision of 111.6 in April. Economists had expected the index to rise by 0.6 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.

With the bigger than expected increase, the pending home sales index reached its highest level since hitting 113.7 in April of 2006.

Sector News

Most of the major sectors have moved notably lower over the course of the session, reflecting broad based weakness on Wall Street.

Brokerage stocks continue to turn in some of the market's worst performances, dragging the NYSE Arca Broker/Dealer Index down by 2.1 percent. E*Trade (ETFC), Charles Schwab (SCHW) and Piper Jaffray (PJC) are posting steep losses.

Considerable weakness is also visible among steel stocks, as reflected by the 2.1 percent loss being posted by the NYSE Arca Steel Index. With the drop, the index has fallen to its lowest intraday level in nearly three months.

Semiconductor, airline, energy, and banking stocks are also seeing significant weakness, while utilities stocks are among the few groups bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Monday. Japan's Nikkei 225 Index plunged by 2.9 percent, while Hong Kong's Hang Seng Index tumbled by 2.6 percent.

The major European markets also saw significant weakness on the day. While the U.K.'s FTSE 100 Index slumped by 2 percent, the German DAX Index and the French CAC 40 Index plummeted by 3.6 percent and 3.7 percent, respectively.

In the bond market, treasuries have moved sharply higher amid the continued concerns about Greece. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 11.6 basis points at 2.36 percent.