Profit Taking Leads To Downturn On Wall Street - U.S. Commentary

(RTTNews) - After failing to sustain an early upward move, stocks came under pressure over the course of the trading session on Monday. With the pullback on the day, the major averages partly offset the strong gains posted last week.

The major averages moved roughly sideways going into the close, stuck in negative territory. The Dow slipped 42.17 points or 0.2 percent to 18,037.97, the Nasdaq slid 31.84 points or 0.6 percent to 5,060.25 and the S&P 500 fell 8.77 points or 0.4 percent to 2,108.92.

The downturn by stocks may partly have reflected profit taking following the strength seen in the broader markets over the past few weeks.

The tech-heavy Nasdaq and the S&P 500 both gave back ground after ending last Friday's trading at new record closing highs.

Uncertainty ahead of the Federal Reserve's monetary policy announcement may have inspired traders to cash in on the recent gains.

The Fed is scheduled to hold a two-day meeting this week, culminating with the announcement of its latest policy decision Wednesday afternoon.

The central bank is not expected to announce an increase in interest rates, but traders will be paying close attention for any hints at a rate hike at the June meeting. A recent batch of disappointing economic data has led many analysts to predict that the Fed will delay its first rate hike until later in the year.

Traders were also looking ahead to the release of quarterly results from Apple (AAPL), with the tech giant releasing its second quarter results after the close of today's trading.

Sector News

Biotechnology stocks showed a substantial move to the downside over the course of the trading day, dragging the NYSE Arca Biotechnology Index down by 4 percent. The index pulled back further off the one-month closing high set last Thursday.

ImmunoGen (IMGN) helped to lead the sector biotech sector lower, tumbling by 11 percent as traders continued to digest news of two drug development setbacks.

Significant weakness also emerged among trucking stocks, as reflected by the 1.4 loss posted by the Dow Jones Trucking Index. Werner Enterprises (WERN) posted a particularly steep loss on the day.

Utilities, pharmaceutical, retail, and housing stocks also came under pressure on the day, contributing to the pullback by the broader markets.

On the other hand, considerable strength remained visible among gold stocks, as reflected by the 1.9 jump by the NYSE Arca Gold Bugs Index. The strength in the sector came as gold for June delivery surged up $28.20 to $1,203.20 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index edged down by 0.2 percent, while Hong Kong's Hang Seng Index surged up by 1.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index jumped by 1.3 percent and the German DAX Index skyrocketed by 1.9 percent.

In the bond market, treasuries saw some volatility over the course of the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.924 percent.

Looking Ahead

Along with Apple's results, trading on Tuesday may also be impacted by reaction to earnings news from Ford (F), Merck (MRK), Pfizer (PFE), UPS (UPS), and Whirlpool (WHR), which are due to report their quarterly results before the start of trading.

Reports on home prices and consumer confidence may also attract some attention, although trading activity may be somewhat subdued ahead of the looming Fed announcement.