Stocks Extend Recent Pullback As Earnings Season Looms - U.S. Commentary

(RTTNews) - After fluctuating in the first hour of trading, stocks have moved notably lower over the course of the trading day on Monday. The downward move on the day extends the pullback that was seen in the two previous sessions.

The major averages have seen some further downside in recent trading, hitting new lows for the session. The Dow is down 131.44 points or 0.8 percent at 16,281.27, the Nasdaq is down 47.88 points or 1.2 percent at 4,079.84 and the S&P 500 is down 16.21 points or 0.9 percent at 1,848.88.

The continued weakness on Wall Street comes following a pullback in the overseas markets, which were lead lower by technology stocks.

Amid a light day on the economic front, traders also continue to cash in on the recent strength in the markets, which lifted the Dow and the S&P 500 to record highs last week.

Traders also seem to be moving out of risky stocks and into safer havens as the markets wait for the quarterly earnings season to get underway.

Aluminum giant Alcoa (AA) is scheduled to release its first quarter results after the close of trading on Tuesday, marking the unofficial start of the earnings season. JP Morgan (JPM) and Wells Fargo (WFC) are also due to report their results later in the week.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "As we embark on the release of Q1 earnings, weather excuses will be widespread and why the guidance will be more relevant."

"For the full year, whether record high profit margins can be sustained will be the key focus, more so than whether top line growth can accelerate," he added.

Among individual stocks, shares of MannKind (MNKD) are moving sharply lower after the biopharmaceutical company said the FDA has extended the review date of its inhaled insulin treatment by three months.

Insurance broker Arthur J. Gallagher (AJG) has also come under pressure despite reporting better than expected first quarter earnings. The company also announced a public offering of 19 million shares of its common stock.

Meanwhile, shares of Questcor Pharmaceuticals (QCOR) have shown a strong upward move after the drug maker agreed to be acquired by Ireland's Mallinckrodt in a deal valued at about $5.6 billion.

Sector News

Adding to the steep losses posted in the two previous sessions, brokerage stocks have moved sharply lower on the day. The NYSE Arca Broker/Dealer Index has plunged by 2.1 percent, falling to a two-month intraday low.

KCG Holdings (KCG) and Stifel Financial (SF) are turning in two of the brokerage sector's worst performances, falling by 3.5 percent and 3.6 percent, respectively.

Housing stocks are also seeing significant weakness in mid-day trading, dragging the Philadelphia Housing Sector Index down by 2.5 percent. M/I Homes (MHO), KB Home (KBH) and D.R. Horton (DHI) are posting notable losses.

Considerable weakness is also visible among oil service stocks, as reflected by the 1.6 percent drop by the Philadelphia Oil Service Index. The weakness in the sector comes as crude for May delivery is sliding $0.69 to $100.45 a barrel.

Electronic storage, chemical, retail and networking stocks have also come under pressure on the day, moving lower along with most of the other major sectors.

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 1.7 percent, while Hong Kong's Hang Seng Index ended the day down by 0.6 percent.

The major European markets also came under pressure on the day. While the German DAX Index tumbled by 1.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both slumped by 1.1 percent.

In the bond market, treasuries have moved moderately higher, extending the strong upward move seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.6 basis points at 2.69 percent.