Stocks Move Sharply Lower Amid Steep Drop In Oil Prices - U.S. Commentary

(RTTNews) - After moving modestly higher at the open, stocks have shown a substantial move to the downside over the course of early trading on Monday. The major averages have slid firmly into negative territory following the volatility seen last week.

In recent trading, the major averages have climbed off their worst levels, but they remain stuck in the red. The Dow is down 122.86 points or 0.7 percent at 17,614.51, the Nasdaq is down 41.70 points or 0.9 percent at 4,662.37 and the S&P 500 is down 18.42 points or 0.9 percent at 2,026.39.

The early weakness on Wall Street comes amid another sharp drop by the price of crude oil, which has fallen to its lowest levels in almost six years.

Crude for February delivery is currently plunging $2.05 to $46.31 a barrel after tumbling $4.33 or 8.2 percent to $48.36 a barrel last week.

The continued drop in oil prices reflects concerns about oversupply, which led analysts at Goldman Sachs to cut their three-month forecasts for the U.S. West Texas Intermediate contract to $41 from $70 a barrel.

Energy stocks are seeing considerable weakness amid the sharp drop in crude oil, with the Philadelphia Oil Service Index and the NYSE Arca Oil & Gas Index plummeting by 4.1 percent and 2.8 percent, respectively.

Significant weakness has also emerged among steel stocks, as reflected by the 3.1 percent loss being posted by the NYSE Arca Steel Index. With the loss, the index has fallen to its lowest level in almost a month.

Electronic storage, semiconductor, railroad, and networking stocks are also seeing notable weakness, while gold stocks are bucking the downtrend amid an increase by the price of the precious metal.

Among individual stocks, shares of Tiffany (TIF) are moving sharply lower after the luxury goods retailer cut its full-year earnings forecast following a disappointing holiday season.

Casino operator Caesars Entertainment (CZR) are also under pressure on news that the company's bondholders have filed papers to force its operating unit into involuntary Chapter 11 bankruptcy.

On the other hand, shares of Foundation Medicine (FMI) have spiked higher after Roche Holding said it will acquire a majority stake in the company.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Hong Kong's Hang Seng Index rose by 0.5 percent, while China's Shanghai Composite Index slumped by 1.7 percent.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index has fallen by 0.7 percent, the French CAC 40 Index is up by 0.2 percent and the German DAX Index is up by 0.4 percent.

In the bond market, treasuries have moved moderately higher amid the sharp drop by the price of crude oil. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.8 basis points at 1.943 percent.