Stocks Regain Ground After Seeing Initial Weakness - U.S. Commentary

(RTTNews) - After falling sharply at the open, stocks have shown a significant recovery attempt over the course of morning trading on Monday. The major averages have climbed well off their lows for the session and are now lingering near the unchanged line.

Currently, the major averages are posting only modest losses. The Dow is down 23.81 points or 0.1 percent at 17,706.30, the Nasdaq is down 2.34 points or 0.1 percent at 5,006.87 and the S&P 500 is down 2.59 points or 0.1 percent at 2,074.19.

The initial weakness on Wall Street came in reaction to 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.

Despite the rebound by the broader markets, significant weakness remains visible among steel stocks. The NYSE Arca Steel Index is down by 2.1 percent after hitting its worst intraday level in over six years.

Electronic storage, natural gas, and oil service stocks also continue to see notable weakness, while considerable strength has emerged among gold stocks.

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 have also come under pressure on the day. While the U.K.'s FTSE 100 Index has fallen by 0.4 percent, the German DAX Index is down by 0.8 percent and the French CAC 40 Index is down by 1.3 percent.

In the bond market, treasuries have given back ground after an early rally but remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.2 basis points at 2.341 percent.