Stocks Close Mixed As Tech Weakness Weighs On Nasdaq - U.S. Commentary

(RTTNews) - Stocks largely turned in a lackluster performance during trading on Monday, as traders looked ahead to the Federal Reserve's monetary policy announcement later this week. Technology stocks saw significant weakness, however, resulting in a sharp drop by the tech-heavy Nasdaq.

The major average eventually ended the session mixed. While the Dow rose 43.63 points or 0.3 percent to 17,031.14, the Nasdaq tumbled 48.70 points or 1.1 percent to 4,518.90 and the S&P 500 edged down 1.41 points or 0.1 percent to 1,984.13.

The choppy trading on Wall Street partly reflected uncertainty about the monetary policy outlook ahead of the Fed's announcement on Wednesday.

The Fed is widely expected to announce a further reduction in the pace of its asset purchases, although traders are likely to pay closer attention to any suggestions regarding the outlook for interest rates.

Recent upbeat economic data has led to some concerns that the Fed may signal that it plans to begin raising rates sooner than previously anticipated.

Traders were also digesting some disappointing Chinese economic reports as well as a mixed batch of U.S. economic data.

The Chinese National Bureau of Statistics reported weaker than expected retail sales growth in August, while a separate report showed that Chinese industrial output also rose by less than expected.

On the U.S. economic front, the New York Federal Reserve released a report showing that business activity in the New York manufacturing sector has expanded at a robust pace in September.

The New York Fed said its headline general business conditions index surged up to 27.5 in September from 14.7 in August, with a positive reading indicating an increase in activity in the New York manufacturing sector. Economists had expected the index to edge up to 16.0.

With the much bigger than expected increase, the general business conditions index reached its highest level since hitting 32.6 in October of 2009.

Meanwhile, a separate report released by the Federal Reserve showed an unexpected drop in industrial production in the month of August.

The Fed said industrial production edged down by 0.1 percent in August after inching up by a downwardly revised 0.2 percent in July.

The modest drop came as a surprise to economists, who had expected production to climb by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Sector News

Electronic storage stocks moved sharply lower over the course of the session, resulting in a 2.5 percent drop by the NYSE Arca Disk Drive Index. The pullback by the index came after it ended the previous session at a three-year closing high.

Within the storage sector, Seagate Technology (STX) posted a notable loss even though the disk drive maker raised its first quarter revenue guidance.

Considerable weakness was also visible among internet stocks, as reflected by the 2.3 percent loss posted by the Dow Jones Internet Index. Twitter (TWTR), Netflix (NFLX) and Facebook (FB) turned in some of the sector's worst performances.

Biotechnology, networking, and semiconductor stocks also came under significant selling pressure on the day, contributing to the steep loss being posted by the Nasdaq.

Outside of the tech sector, airline and tobacco stocks saw notable weakness, while energy stocks moved to the upside along with the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, although the Japanese markets were closed for a holiday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index both dropped by 1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. The German DAX Index inched up by 0.1 percent, while the French CAC 40 Index edged down by 0.3 percent and the U.K.'s FTSE 100 Index closed just below the unchanged line.

In the bond market, treasuries showed a modest move back to the upside following the sell-off seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 2.591 percent.

Looking Ahead

Trading on Tuesday could be impacted by the release of a report on producer price inflation, although activity may be somewhat subdued as the Fed's two-day monetary policy meeting gets underway.