U.S. Stocks Seeing Further Downside After Early Pullback

(RTTNews) - After moving mostly lower early in the session, stocks have seen further downside over the course of the trading day on Monday. With the steep drop on the day, the Dow is pulling back well off last Friday's seven-month closing high.

Currently, the major averages are just off their lows of the session. The Dow is down 345.66 points or 1.0 percent at 34,001.37, the Nasdaq is down 114.14 points or 1.0 percent at 11,112.21 and the S&P 500 is down 42.95 points or 1.1 percent at 3,983.17.

Concerns about the latest developments in China are weighing on Wall Street, as widespread protests against the Beijing's zero-Covid policy broke out over the weekend.

A recent surge in new Covid cases in China has led officials to impose new restrictions in several major cities, dashing hopes the world's second-largest economy was on the way toward easing curbs.

Craig Erlam, senior market analyst at OANDA, said the protests "highlight how increasingly frustrated the public is becoming with the leadership's zero-Covid policy."

"Record cases across multiple cities are putting the policy to the test and the unrest highlights the enormity of the challenge facing President Xi Jinping and his commitment to zero-Covid," Erlam said.

He added, "The combination of these creates huge uncertainty, both in terms of how the protests are handled and what the whole experience means for the future of the policy and the economy."

The weakness on Wall Street may also reflect lingering uncertainty about the outlook for interest rates ahead of next month's Federal Reserve meeting.

While the Fed is widely expected to slow the pace of interest rate hikes next month, the minutes of the central bank's early November meeting suggested some officials think rates will be to be raised higher than previously anticipated.

Traders are also looking to the release of some key economic data in the coming days, including the Labor Department's closely watched monthly jobs report on Friday.

Sector News

Gold stocks have moved sharply lower over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 3.1 percent.

The sell-off by gold stocks comes amid a decrease by the price of the precious metal, with gold for December delivery falling $12.10 to $1,741.90 an ounce.

Significant weakness also remains visible among airline stocks, as reflected by the 2.2 percent slump by the NYSE Arca Airline Index.

Banking stocks have also shown a notable move to the downside on the day, resulting in a 2.0 percent drop by the KBW Bank Index.

Computer hardware, commercial real estate and telecom stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index slumped by 0.8 percent.

The major European markets also moved to the downside on the day. While the German DAX Index tumbled by 1.1 percent, the French CAC 40 Index slid by 0.7 percent and the U.K.'s FTSE 100 Index edged down by 0.2 percent.

In the bond market, treasuries have turned lower over the course of the session after seeing early strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.4 basis points at 3.715 percent.