Stocks Fluctuate Before Closing Mostly Lower - U.S. Commentary

(RTTNews) - Stocks fluctuated over the course of the trading session on Monday following the rebound seen last Friday. After recovering from an early move to the downside, the major averages spent the day bouncing back and forth across the unchanged line.

The major averages ended the day firmly in negative territory. The Dow fell 89.44 points or 0.4 percent to 25,250.55, the Nasdaq slid 66.15 points or 0.9 percent to 7,430.74 and the S&P 500 dropped 16.34 points or 0.6 percent to 2,750.79.

The lower close on Wall Street came after the Commerce Department released a report 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."

A separate report released by the Federal Reserve Bank of New York showed the pace of growth in New York manufacturing activity accelerated by more than anticipated in the month of October.

The New York Fed said its general business conditions index rose to 21.1 in October from 19.0 in September, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to inch up to 20.0.

Sector News

Tobacco stocks showed a significant move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 1.5 percent.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 1.2 percent drop by the NYSE Arca Biotechnology Index.

Oil and semiconductor stocks also moved notably lower, while gold, natural gas, and networking stocks moved to the upside.

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 climbed by 0.5 percent.

In the bond market, treasuries saw further downside after ending the previous session slightly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 3.163 percent.

Looking Ahead

Earnings news is likely to attract attention on Tuesday, with Goldman Sachs (GS), Johnson & Johnson (JNJ), Morgan Stanley (MS), and UnitedHealth (UNH) among the companies releasing their quarterly results before the start of trading.

Traders are also likely to keep an eye on the latest economic data, including reports on industrial production and homebuilder confidence.