Stocks Close Lower On Worries About Rates, Global Economy - U.S. Commentary

(RTTNews) - Stocks moved notably lower during trading on Monday, giving back some ground after trending higher over the past several weeks. With the drop on the day, the major averages pulled back further off their recent highs.

The major averages climbed off their worst levels of the day but still closed in the red. The Dow tumbled 179.85 points or 1 percent to 17,730.48, the Nasdaq slid 51.82 points or 1 percent to 5,095.30 and the S&P 500 fell 20.62 points or 1 percent to 2,078.58.

The weakness on Wall Street partly reflected profit taking following the strength seen in recent weeks, which lifted the major averages to their best levels in three months.

Worries about the outlook for U.S. monetary policy also weighed on the markets after last Friday's better than expected monthly jobs report.

The Labor Department report said non-farm payroll employment jumped by 271,000 jobs in October, pushing the unemployment down to a seven-year low of 5.0 percent.

The strong job growth is a positive sign for the U.S. economy, but the data also increases the likelihood the Federal Reserve will raise interest rates next month.

Negative sentiment was also generated by news that the Organisation for Economic Cooperation and Development lowered its forecast for global economic growth.

The OECD said it now expects the global economy to grow by 2.9 percent this year, well below the long-run average and down from its previous estimate for 3.0 percent growth.

The group attributed the lower growth forecast to a further sharp downturn in emerging market economies and a drop in world trade.

Amid a quiet day on the U.S. economic front, traders were also reacting to a report from Chinese customs showing that exports fell for the fourth straight month.

The report said exports were down 6.9 percent year-over-year in October. Imports fell a steeper 18.8 percent.

The Chinese trade surplus subsequently increased to $61.6 billion from $60.3 billion in September, while economists expected a surplus of $62 billion.

Sector News

Most of the major sectors moved to the downside during the trading session, reflecting broad based weakness on Wall Street.

Airline stocks saw substantial weakness on the day, resulting in a 2.5 percent drop by the NYSE Arca Airline Index. Despite the loss, the index remained stuck in a recent trading range.

Significant weakness was also visible among networking stocks, as reflected by the 2.3 percent loss posted by the NYSE Arca Networking Index. Juniper Networks (JNPR) led the way lower after rival Cisco (CSCO) struck a partnership with Ericsson (ERIC).

Commercial real estate, trucking, and housing stocks also saw considerable weakness, while strength among railroad, gold, and biotech stocks helped to limit the downside for the markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang Seng Index fell by 0.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.9 percent, the French CAC 40 Index and the German DAX Index tumbled by 1.5 percent and 1.6 percent, respectively.

In the bond market, treasuries ended the day slightly lower, extending the downward trend seen in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by nearly a basis point to 2.342 percent..

Looking Ahead

Trading on Tuesday may be impacted by reaction to U.S. reports on import and exports prices and wholesale inventories.