Stocks Give Back Ground Following Recent Strength - U.S. Commentary

(RTTNews) - Following the strength seen in the previous week, stocks gave back some ground during trading on Monday. The major averages moved to the downside early in the session and remained stuck in the red throughout the day.

The major averages climbed off their worst levels but still closed in negative territory. The Dow fell 122.65 points or 0.6 percent to 19,971.13, the Nasdaq slid 47.07 points or 0.8 percent to 5,613.71 and the S&P 500 dropped 13.79 points or 0.6 percent to 2,280.90.

Profit taking contributed to the weakness on Wall Street, with the major averages pulling back off last week's record highs.

The pullback by stocks was also attributed to concerns about the impact of President Donald Trump's new immigration policies.

On the U.S. economic front, the Commerce Department released a report showing that personal income increased by slightly less than expected in the month of December.

The report said personal income rose by 0.3 percent in December after inching up by 0.1 percent in November. Economists had expected income to rise by 0.4 percent.

The Commerce Department also said personal spending climbed by 0.5 percent in December after rising by 0.2 percent in the previous month. The increase in spending matched economist estimates.

Meanwhile, a separate report from the National Association of Realtors showed a bigger than expected rebound in pending home sales in the month of December.

NAR said its pending home sales index jumped 1.6 percent to 109.0 in December after tumbling by 2.5 percent to 107.3 in November. Economists had expected pending home sales to increase by 0.6 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Sector News

Energy stocks showed a significant move to the downside on the day amid a decrease by the price of crude oil. Crude for March delivery slid $0.54 to $52.63 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 3 percent, the Philadelphia Oil Service Index tumbled by 2.8 percent and the NYSE Arca Oil & Gas Index fell by 1.4 percent.

Considerable weakness was also visible among airline stocks, as reflected by the 1.8 percent drop by the NYSE Arca Airline Index. Concerns about the impact of Trump's new immigration policies weighed on the sector.

Steel, biotechnology, and tobacco stocks also saw notable weakness on the day, moving lower along with most of the 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 0.5 percent, while Australia's All Ordinaries Index dropped by 0.9 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index slid by 0.9 percent, the French CAC 40 Index and the German DAX Index both slumped by 1.1 percent.

In the bond market, treasuries showed a lack of direction over the course of the session before closing nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.483 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to reports on home prices, consumer confidence, and Chicago-area business activity.

On the earnings front, Aetna (AET), ExxonMobil (XOM), MasterCard (MA), Pfizer (PFE) and UPS (UPS) are among the companies due to report their quarterly results before the start of trading on Tuesday.