Stocks Close Mostly Lower, Extending Last Week's Sell-Off - U.S. Commentary

(RTTNews) - Stocks fluctuated over the course of the trading day on Monday but maintained a negative bias before closing mostly lower. The drop on the day extended the downward move seen last week, which was the worst for the markets since 2012.

The major averages all closed in the red, although the tech-heavy Nasdaq underperformed its counterparts. While the Nasdaq tumbled 44.56 points or 1.1 percent to 4,083.61, the Dow dipped 41.23 points or 0.3 percent to 15,837.88 and the S&P 500 slid 8.73 points or 0.5 percent to 1,781.56.

The continued weakness on Wall Street partly reflected lingering concerns about emerging markets as well as the likelihood of further tapering by the Federal Reserve.

The Fed is holding a two-day monetary policy meeting beginning on Tuesday, and traders will be closely watching any comments regarding the outlook for its asset purchase program following December's decision to begin scaling back stimulus.

A Commerce Department report showing a much steeper than expected drop in new home sales in December also weighed on the markets.

The report said new home sales tumbled 7.0 percent to an annual rate of 414,000 in December from the revised November rate of 445,000. Economists had expected sales to dip to 455,000 from the 464,000 originally reported for the previous month.

With the steep drop, new home sales pulled back further off the rate of 463,000 seen in October, which was the highest since July of 2008.

Among individual stocks, shares of Regis (RGS) fell sharply after the parent of Supercuts reported an unexpected second quarter loss. Regis fell by 9.9 percent to its lowest closing level in over four years.

Online search giant Google (GOOG) also posted a notable loss after continuing its buying spree with the acquisition of artificial intelligence company DeepMind for a reported $400 million.

On the other hand, Caterpillar (CAT) turned in a strong performance after the construction equipment maker reported better than expected fourth quarter results and provided upbeat guidance for 2014. The company also said its board has approved a new $10 billion stock repurchase program.

Sector News

Gold stocks moved sharply lower over the course of the trading day, dragging the NYSE Arca Gold Bugs Index down by 3.1 percent. The weakness in the gold sector came amid a modest decrease by the price of the precious metal.

Considerable weakness was also visible among airline stocks, as reflected by the 2.2 percent loss posted by the NYSE Arca Airline Index. With the loss, the index pulled back further off the eleven-year closing high set last Wednesday.

Brokerage stocks also came under significant selling pressure on the day, resulting in a 2.1 percent drop by the NYSE Arca Broker/Dealer Index. The index also pulled back further off last Wednesday's five-year closing high.

Tobacco, biotechnology, software, and trucking stocks also showed notable moves to the downside over the course of the trading day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index plunged by 2.5 percent, while Hong Kong's Hang Seng Index tumbled by 2.1 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 1.7 percent, the German DAX Index and the French CAC 40 Index fell by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries moved moderately lower after initially showing a lack of direction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to 2.766 percent.

Looking Ahead

Trading on Tuesday could be impacted by reaction to earnings news from tech giant Apple (AAPL), which is releasing its quarterly results after the close of today's trading.

Ford (F), DuPont (DD), and Pfizer (PFE) are also among the companies due to report their results before the start of trading on Tuesday.

Reports on durable goods orders, home prices, and consumer confidence may also attract some attention on Tuesday, although traders may be reluctant to make any significant moves as the Fed meeting gets underway.