Stocks Turning In A Lackluster Performance In Mid-Day Trading - U.S. Commentary

(RTTNews) - After recovering from an initial move to the downside, stocks are turning in a lackluster performance in mid-day trading on Monday. The major averages have spent much of the day bouncing back and forth across unchanged line.

Currently, the major averages are posting modest losses on the day. The Dow is down 8.86 points or 0.1 percent at 17,949.93, the Nasdaq is down 0.27 points or less than a tenth of a percent at 4,780.49 and the S&P 500 is down 1.50 points or 0.1 percent at 2,073.87.

The initial weakness on Wall Street partly reflected renewed worries about the global economy following the release of some disappointing economic data from overseas.

A revised report released by Japan's Cabinet Office showed that Japanese GDP contracted by 1.9 percent year-over-year in the third quarter, faster than the 1.6 percent drop initially estimated and the 0.5 percent decline expected by economists.

Disappointing Chinese trade data also generated some negative sentiment, with a report showing notably slower export growth and an unexpected drop in imports.

Julian Evans-Pritchard, China Economist at Capital Economics, said, "Despite today's data, we still expect exports to fair reasonably well going forward given that global growth looks set to continue to recover next year."

"In contrast, import growth is likely to remain weak given the ongoing structural slowdown in investment," he added.

Nonetheless, traders seemed reluctant to sell stocks and miss out on any further upside for the markets following recent strength.

While stocks have regained some ground since then, trading activity has remained somewhat subdued amid a lack of major U.S. economic data.

The economic calendar will pick up later in the week, with traders likely to keep a close eye on reports on weekly jobless claims, retail sales, and producer price inflation.

Sector News

Despite the lackluster performance being turned in by the broader markets, substantial weakness is visible among energy stocks. A sharp drop by the price of crude oil is weighing on the sector, with crude for January delivery plunging $2.56 to $63.28 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Oil & Gas Index, the Philadelphia Oil Service Index, and the NYSE Arca Natural Gas Index are all plummeting by more than 3 percent.

Gold stocks have also come under pressure over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 2.1 percent. The weakness in the gold sector comes despite an increase by the price of the precious metal.

Steel, railroad, and computer hardware stocks have also moved to the downside on the day, while considerable strength is visible among biotechnology and utilities stocks.

Within the biotech sector, Cubist Pharmaceuticals (CBST) is posting a standout gain after agreeing to be acquired by Merck (MRK) in a deal valued at $9.5 billion.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index inched up by 0.1 percent and 0.2, respectively, while South Korea's KOSPI Index dropped by 0.4 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index fell by 0.7 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index tumbled by 1 percent and 1.1 percent, respectively.

In the bond market, treasuries are seeing modest strength after ending last Friday's trading sharply lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.8 basis points at 2.289 percent.