Stocks Close Notably Lower Amid Drop In Commodities Prices - U.S. Commentary

(RTTNews) - After falling sharply in early trading, stocks saw considerable weakness throughout the trading session on Monday. With the losses on the day, the major averages more than offset the modest gains posted last week.

The major averages regained some ground going into the close but still ended the session firmly in the red. The Dow slid 117.12 points or 0.7 percent to 17,730.51, the Nasdaq fell 40.46 points or 0.8 percent to 5,101.81 and the S&P 500 dropped 14.62 points or 0.7 percent to 2,077.07.

The weakness on Wall Street came as resource stocks came under pressure amid notable decreases in commodities prices.

Energy stocks saw considerable weakness, as the price of crude oil for January delivery plummeted $2.32 to $37.65 a barrel.

The price of crude oil fell to its lowest levels in more than six years after OPEC ended its policy meeting without announcing a reduction in production.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index has plunged by 4.9 percent, while the Philadelphia Oil Service Index and the NYSE Arca Oil and & Gas Index tumbled by 4.3 percent and 3.8 percent, respectively.

Biotechnology, steel, trucking, and chemical stocks also saw significant weakness, moving lower along with most of the other major sectors.

Selling pressure was also generated by concerns about the outlook for monetary policy ahead of next week's Federal Reserve meeting.

The Fed is widely expected to announce an increase in interest rates following the meeting, but traders are likely to pay close attention to the wording of the statement.

Fed officials have repeatedly indicated they expect the pace of monetary policy normalization to be gradual due to lingering concerns about the momentum of the U.S. economy.

The economic calendar for this week starts off relatively quiet, although reports on producer prices and retail sales are likely to attract attention later in the week.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index advanced by 1 percent, while Hong Kong's Hang Seng Index dipped by 0.2 percent.

The major European markets also ended the day mixed. While the U.K.'s FTSE 100 Index dipped by 0.2 percent, the French CAC 40 Index climbed by 0.9 percent and the German DAX Index jumped by 1.3 percent.

In the bond market, treasuries moved notably higher amid the weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5 basis points to 2.225 percent.