Stocks Close Lower In Reaction To Greek "No" Vote - U.S. Commentary

(RTTNews) - With traders reacting negatively to the outcome of the weekend's referendum in Greece, stocks moved mostly lower during trading on Monday. During the session, the Dow hit its lowest intraday level in five months.

The major averages ended the day in negative territory but well off their lows for the session. The Dow dipped 46.53 points or 0.3 percent to 17,683.58, the Nasdaq slid 17.27 points or 0.3 percent to 4,991.94 and the S&P 500 fell 8.02 points or 0.4 percent to 2,068.76.

The weakness on Wall Street came following news that the Greek people voted to reject the austerity measures proposed by the country's international creditors.

The "no" vote on the referendum has added to recent concerns about Greece leaving the eurozone, a move commonly known as the "Grexit."

European officials said they respect the Greek voters' decision but argued that it is now up to the Greek government to come up with a new proposal.

Following the vote, Greek Finance Minister Yanis Varoufakis announced his resignation amid indications that he was unwelcome at meetings of European finance ministers.

William Jackson, Senior Emerging Markets Economist at Capital Economics, said, "The Greek No vote has opened a new chapter in the euro-crisis."

"From here on, negotiations will be tortuous and the risk of a Greek exit from the euro-zone is high (greater than 50%)," he added.

On the U.S. economic front, the Institute for Supply Management released a report showing that activity in the service sector expanded at a modestly faster rate in the month of June.

The ISM said its non-manufacturing index inched up to 56.0 in June from 55.7 in May, with a reading above 50 indicating growth in the service sector.

Sector News

Steel stocks saw substantial weakness on the day, dragging the NYSE Arca Steel Index down by 2.8 percent. With the drop, the index ended the session at a six-year closing low.

Cliffs Natural Resources (CLF) and AK Steel (AKS) turned in two of the sector's worst performances, tumbling by 8 percent and 6.8 percent, respectively.

Significant weakness was also visible among oil service stocks, as reflected by the 2.6 percent loss posted by the Philadelphia Oil Service Index. The weakness in the sector came as crude oil for August delivery plunged $4.40 to $52.53 a barrel.

Natural gas, semiconductor, electronic storage, and networking stocks also saw considerable weakness on the day, while gold stocks bucked 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 2.1 percent, while Hong Kong's Hang Seng Index plummeted by 3.2 percent.

The major European markets also saw considerable weakness on the day. While the U.K.'s FTSE 100 Index dropped by 0.8 percent, the German DAX Index and the French CAC 40 Index slumped by 1.5 percent and 2 percent, respectively.

In the bond market, treasuries moved sharply higher due to their appeal as a safe haven. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 11.5 basis points to 2.278 percent.

Looking Ahead

Any additional news regarding Greece is likely to be in the spotlight on Tuesday, overshadowing a report on U.S. trade.