Stocks Remain Mostly Negative In Mid-Day Trading - U.S. Commentary

(RTTNews) - After coming under pressure early in the session, stocks remain mostly negative in mid-day trading on Monday. Worries about developments overseas are weighing on the markets, overshadowing upbeat U.S. manufacturing data.

Currently, the major averages are stuck in the red, with the tech-heavy Nasdaq showing a sharp pullback. While the Nasdaq is down 64.69 points or 1.4 percent at 4,726.94, the S&P 500 is down 15.83 points or 0.8 percent at 2,051.73 and the Dow is down 52.70 points or 0.3 percent at 17,775.54.

The weakness on Wall Street comes on the heels of news that credit ratings agency Moody's downgraded Japan's debt rating by one notch to A1 from Aa3.

Moody's said the outlook is stable but warned of heightened uncertainty over the achievability of Japan's deficit reduction goals as well as uncertainty over the timing and effectiveness of its growth enhancing policy measures.

A report released by China's Bureau of National Statistics showing that their reading on manufacturing activity in November was downwardly revised to 50.3 from 50.5 has also weighed on the markets.

Negative sentiment has also been generated by indications of lower holiday spending over the vital Thanksgiving weekend.

The National Retail Federation said total spending is expected to reach $50.9 billion, down 11.3 percent from last year's estimated $57.4 billion.

However, Peter Boockvar, managing director at the Lindsey Group, cautioned that online purchases and constant discounting make the overall holiday shopping season impossible to call this early on.

Traders have largely shrugged off a report from the Institute for Supply Management showing that its index of U.S. manufacturing activity fell by much less than anticipated in the month of November.

The ISM said its purchasing managers index edged down to 58.7 in November from 59.0 in October, with a reading above 50 indicating continued growth in the manufacturing sector.

Economists had expected the ISM's manufacturing index to show a somewhat more significant decrease to a reading of 57.8.

Sector News

Railroad stocks continue to see substantial weakness in mid-day trading, with the Dow Jones Railroads Index down by 3.9 percent. The index is adding to the 4.8 percent loss that it posted last Friday.

The sell-off seen by railroad stocks over the past two sessions reflects concerns about the impact that the recent sharp drop in oil prices will have on the industry.

Considerable weakness also remains visible among oil service stocks, as reflected by the 3 percent loss being posted by the Philadelphia Oil Service Index. With the drop, the index has fallen to its lowest intraday level in two years.

The continued weakness among oil service stocks comes even though crude oil for January delivery is jumping $2.24 to $68.39 a barrel.

Steel, natural gas, internet, and airline stocks are also seeing significant weakness on the day, moving lower along with most of the other major sectors.

However, gold stocks have shown a strong move to the upside amid a sharp jump by the price of the precious metal. With gold for February delivery surging up $26.40 to $1,201.90 an ounce, the NYSE Arca Gold Bugs Index is up by 5.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index tumbled by 2.6 percent and 2 percent, respectively. However, Japan's Nikkei 225 Index bucked the downtrend and advanced by 0.8 percent.

The major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1 percent, the French CAC 40 Index and the German DAX Index dipped by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries have pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.188 percent.