Stocks Regain Ground After Early Move To The Downside – U.S. Commentary

Stocks Regain Ground After Early Move To The Downside – U.S. Commentary

After an early move to the downside, stocks have regained ground over the course of the trading session on Monday. The major averages have climbed well off their worst levels of the day.

Currently, the major averages are turning in a mixed performance. While the Dow is up 5.89 points or less than a tenth of a percent at 25,345.88, the Nasdaq is down 46.54 points or 0.6 percent at 7,450.36 and the S&P 500 is down 6.14 points or 0.2 percent at 2,760.99.

The early weakness on Wall Street came following the release of disappointing retail sales data, with a report from the Commerce Department showing much weaker than expected U.S. retail sales growth in the month of September.

The Commerce Department said retail sales inched up by 0.1 percent in September, matching the uptick seen in August. Economists had expected retail sales to climb by 0.5 percent.

Excluding a rebound in auto sales, retail sales edged down by 0.1 percent in September after rising by a downwardly revised 0.2 percent in August.

Ex-auto sales had been expected to rise by 0.3 percent, matching the increase originally reported for the previous month.

Meanwhile, the report said closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, climbed by 0.5 percent in September after coming in unchanged in August.

“Overall, the current strength of underlying retail spending reflects the continued boost to incomes from the tax cuts enacted at the start of the year,” said Andrew Hunter, U.S. Economist at Capital Economics.

He added, “That said, sales growth looks most likely to slow in the fourth quarter as that boost starts to fade, and we still expect a more marked slowdown in real consumption growth over the course of next year.”

Lingering worries about global trade and higher U.S. interest rates also weighed on the markets along with growing tension between the U.S. and Saudi Arabia over the disappearance of a prominent Saudi journalist.

Selling pressure waned shortly after the start of trading, however, with traders reluctant to make more significant moves amid uncertainty about the near-term outlook for the markets following recent volatility.

Sector News

Most of the major sectors are showing only modest moves in mid-day trading, contributing to the lackluster performance by the broader markets.

Gold stocks have shown a substantial move to the upside, however, with the NYSE Arca Gold Bugs Index jumping by 3.1 percent. The index has reached a two-month intraday high.

The strength among gold stocks comes amid an increase by the price of the precious metal, as gold for December delivery is climbing $8.40 to $1,230.40 an ounce.

Notable strength has also emerged among natural gas stocks, which are moving higher along with the price of the commodity.

Commercial real estate and networking stocks have also moved to the upside on the day, while some weakness remains visible among biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific saw significant weakness during trading on Monday. Japan’s Nikkei 225 Index plummeted by 1.9 percent, while Hong Kong’s Hang Seng Index slumped by 1.4 percent.

Meanwhile, European stocks moved mostly higher on the day, although the French CAC 40 Index bucked the uptrend and closed marginally lower. The German DAX Index advanced by 0.8 percent and the U.K.’s FTSE 100 Index rose by 0.5 percent.

In the bond market, treasuries are seeing modest weakness after ending the previous session slightly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.7 basis points at 3.158 percent.

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