U.S. Stocks Showing Notable Move Back To The Downside

Stocks have moved mostly lower during trading on Monday, giving back ground following recent strength. The major averages have all moved to the downside on the day, with the tech-heavy Nasdaq leading the pullback.

Currently, the major averages are just off their highs of the session. The Nasdaq is down 225.09 points or 1.6 percent at 14,079.94, the S&P 500 is down 42.81 points or 0.9 percent at 4,551.82 and the Dow is down 153.07 points or 0.4 percent at 36,092.43.

The weakness on Wall Street partly reflects profit taking, with some traders looking to cash in on the recent strength in the markets.

The Dow and the S&P 500 ended last Friday’s trading at their best closing levels since early 2022, while the Nasdaq reached a four-month closing high.

Stocks have recently benefited from optimism about the outlook for interest rates, as the Federal Reserve is widely expected to leave rates unchanged until cutting rates as early as March 2024.

A rebound by treasury yields may also be contributing to the pullback on Wall Street, as the yield on the benchmark ten-year note is bouncing off its lowest levels in three months.

Meanwhile, traders are also looking ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 180,000 jobs in November after rising by 150,000 jobs in October, while the unemployment rate is expected to hold at 3.9 percent.

“Another weaker report, especially one paired with 0.2% monthly wage growth, could further fuel the belief that not only is the tightening cycle over but rate cuts may not be far away,” said Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA.

Reports on service sector activity, private sector jobs, weekly jobless claims and consumer sentiment may also attract attention in the coming days.

The Commerce Department released a report this morning showing factory orders pulled back by much more than expected in the month of October.

The report said factory orders plunged by 3.6 percent in October after jumping by a downwardly revised 2.3 percent in September.

Economists had expected factory orders to tumble by 2.6 percent compared to the 2.8 percent surge originally reported for the previous month.

Sector News

Gold stocks have pulled back sharply on the day, dragging the NYSE Arca Gold Bugs Index down by 2.8 percent. The index ended last Friday’s trading at its best closing level in over four months.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for February delivery plunging $46.40 to $2,043.30 an ounce.

Software and semiconductor stocks are also seeing substantial weakness, as reflected by the 2.5 percent slumps by the Dow Jones U.S. Software Index and the Philadelphia Semiconductor Index.

Computer hardware and steel stocks are also seeing considerable weakness, while airline stocks have shown a strong move to the upside.

Shares of Hawaiian Holdings (HA) are skyrocketing after the parent of Hawaiian Airlines agreed to be acquired by Alaska Air Group (ALK) for $18.00 per share in cash.

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 fell by 0.6 percent, while South Korea’s Kospi climbed by 0.4 percent.

The major European markets have also turned mixed on the day. While the German DAX Index is up by 0.1 percent, the French CAC 40 Index is down by 0.1 percent and the U.K.’s FTSE 100 Index is down by 0.2 percent.

In the bond market, treasuries are giving back ground after moving sharply higher in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.4 basis points at 4.290 percent.

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