Stocks Staying Largely On The Downside In Mid-Afternoon Trading - U.S. Commentary

Mon. July 06, 2009; Posted: 02:40 PM

(RTTNews) - Stocks remain mostly negative in mid-afternoon trading on Monday, as near-term economic concerns continue to fuel the day's pullback, most notably in commodity-related stocks. While the Dow has moved well off its lows, the Nasdaq and the S&P 500 have been holding in the red.

The Institute for Supply Management released a report earlier in the day showing that activity in the service sector contracted for the ninth consecutive month in June, although the pace of contraction slowed by even more than economists had been expecting.

The major averages are currently turning in a mixed performance, with the Dow posting a modest gain. While the Dow is currently up 1.13 at 8,281.17, the Nasdaq is down 18.75 at 1,777.77 and the S&P 500 is down 2.97 at 893.45.

Dow Components

A slim majority of the Dow components are currently in positive territory, contributing to the modest gain currently being shown by the blue chip index.

Nonetheless, a notable decline by shares of Alcoa (AA | Quote | Chart | News | PowerRating) has helped to limit the upside for the Dow. Shares of the aluminum producer are down by 6.9 percent, reaching their worst intraday price in just over one month.

Bank of America (BAC | Quote | Chart | News | PowerRating) is also struggling, down by 4.6 percent on the day. The move comes as the firm revealed that it expects its write-offs for bad loans to rise by 10 percent in the second quarter. Despite the pullback, the stock remains in roughly a three week trading range.

Sector News

Resource stocks continue to disappoint, with gold and steel stocks falling by comparable margins. The NYSE Arca Gold Bugs Index and the NYSE Arca Steel Index are both currently down 4.8 percent.

In the gold sector, Harmony Gold Mining (HMY | Quote | Chart | News | PowerRating) is seeing a sharp loss, falling by 7.8 percent on the day. With the decline, the stock has slipped to its worst intra-day level in over two months.

Oil, oil service and natural gas stocks are also retreating, with a 2.1 percent drop being shown by the NYSE Arca Oil Index. The Philadelphia Oil Service Index and the NYSE Arca Natural Gas Index are also down more than 2 percent each. The move comes as commodity prices have taken a hit, with the price of oil plunging by $2.73 to $64.00 a barrel.

Semiconductor, networking, housing and healthcare provider stocks are also seeing considerable downside, reflecting the widespread weakness on the day.

Despite the retreat by most sectors, tobacco and commercial real estate stocks are seeing significant strength. The NYSE Arca Tobacco Index has risen 2.3 percent and the Morgan Stanley Real Estate Index has risen by 1.6 percent.

In Focus: Service Sector Data, Corporate News, Fed Buyback, Obama In Russia

As mentioned earlier, the ISM said its index of activity in the service sector rose to 47.0 in June from 44.0 in May, although a reading below 50 indicates a contraction. Economists had been expecting the index to come in at 46.0.

On the corporate front, beleaguered automaker General Motors has been granted permission by a U.S. bankruptcy judge to sell most of its assets to a U.S Treasury-funded buyer.

In other news, the Federal Reserve continued its treasury buyback program Monday, completing its first quantitative easing move of the week. The New York Federal Reserve purchased $7.0 billion worth of securities with maturity dates ranging from December of 2013 to April of 2016.

The day's buyback saw a total of $18.2 billion in treasuries submitted for purchase. Overall, the Fed has purchased a total of $197.72 billion since the program began on March 25th.

President Barack Obama is attending his first Moscow summit today, meeting with Russian President Dmitry Medvedev to discuss the relationship between the two countries. The leaders reaffirmed their commitment to the "common fight" against terrorism and drug trafficking in Afghanistan, while reaching an agreement to reduce nuclear weapon stockpiles.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region ended Monday's session mostly lower. Japan's benchmark Nikkei 225 Index closed down by 1.4 percent, while Hong Kong's Hang Seng Index slipped by 1.2 percent.

The major European markets also saw notable weakness on the day, with the German DAX Index and French CAC 40 Index both finishing down 1.2 percent. The U.K.'s FTSE 100 Index also fell, posting a loss of 1 percent for the day.

In the bond markets, treasuries have moved back to the upside, with the benchmark ten-year note climbing above the unchanged line. Subsequently, the yield on the ten-year note is trading at 3.498 percent, a drop of less than a basis point.

More News: Market Updates | Stock Alerts | All Trading News | Stock Index

Archives

Feedback

Email Article Link

Close X

RELATED SITES

Please call 1-213-955-5858 ext. 1

Tax Relief Bank Levy Wage Garnishment

Disclaimer:

The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.

It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302

All analyst commentary provided on TradingMarkets.com is provided for educational purposes only. The analysts and employees or affiliates of TradingMarkets.com may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on TradingMarkets.com is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy.