Stocks Close Sharply Lower Following Volatile Session - U.S. Commentary

(RTTNews) - Stocks showed wild swings over the course of the trading session on Monday before ending the day substantially lower. With the sell-off on the day, the Dow fell to its lowest closing level in over eight months, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in over a year.

The major averages climbed off their lows of the session going into the close but remained firmly negative. The Dow plummeted 507.53 points or 2.1 percent to 23,592.98, the Nasdaq tumbled 156.93 points or 2.3 percent to 6,753.73 and the S&P 500 plunged 54.01 points or 2.1 percent to 2,545.94.

The sharply lower close on Wall Street came amid lingering concerns about global economic growth as well as continued uncertainty about trade between the U.S. and China.

Traders were also on edge ahead of the Federal Reserve's highly anticipated monetary policy announcement scheduled for Wednesday.

The Fed is widely expected to raise interest rates by another quarter point, although traders are likely to closely scrutinize the central bank's accompanying statement and forecasts for clues about future rate hikes.

Negative sentiment was also generated by some disappointing U.S. economic data, including a report from the National Association of Home Builders unexpectedly showing a continued deterioration in confidence in the month of December.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 56 in December after tumbling to 60 in November. Economists had expected the index to inch up to 61.

With the unexpected monthly decrease, the housing market index tumbled to its lowest level since hitting 54 in May of 2015.

NAHB Chief Economist Robert Dietz called the housing slowdown an "early indicator of economic softening."

A separate report from the New York Federal Reserve showed a much bigger than expected slowdown in the pace of growth in regional manufacturing activity in December.

Sector News

Tobacco stocks moved sharply lower over the course of the trading session, dragging the NYSE Arca Tobacco Index down by 4.2 percent. With the steep drop, the index ended the session at its lowest closing level in well over two years.

Substantial weakness was also visible among interest rate-sensitive commercial real estate and utilities stocks, with the Dow Jones Real Estate Index and the Dow Jones Utilities Average plunging by 3.8 percent and 4.3 percent, respectively.

Within the utilities sector, PG&E Corp. (PCG) saw significant weakness on news the California Public Utilities Commission is considering penalties against the company for systemic violations of rules to prevent damage to natural gas pipelines during excavation activities.

Software, retail, telecom and computer hardware stocks also saw considerable weakness amid another broad based sell-off on Wall Street.

Meanwhile, gold stocks were among the few groups to buck the downtrend, resulting in a 2.7 percent jump by the NYSE Arca Gold Bugs Index.

The rally by gold stocks came amid a notable increased by the price of the precious metal, as gold for February delivery climbed $10.40 to $1,251.80 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index climbed by 0.6 percent, while China's Shanghai Composite Index edged up by 0.2 percent.

Meanwhile, the major European markets moved to the downside on the day. While the German DAX Index fell by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both slumped by 1.1 percent.

In the bond market, treasuries extended the upward move seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 2.857 percent.

Looking Ahead

A report on new residential construction in November may attract attention on Tuesday, although trading activity could be somewhat subdued as the Fed's two-day monetary policy meeting gets underway.