Stocks Give Back Ground Following Last Week's Rebound - U.S. Commentary

(RTTNews) - Stocks have come under pressure in early trading on Monday, giving back some ground following the rebound seen last week. The major averages have slid firmly into negative territory, although selling pressure has waned since the open.

In recent trading, the major averages have climbed well off their worst levels, but they remain in the red. The Dow is down 114.58 points or 0.7 percent at 16,528.43, the Nasdaq is down 29.00 points or 0.6 percent at 4,799.33 and the S&P 500 is down 12.56 points or 0.6 percent at 1,976.31.

The early weakness on Wall Street partly reflects renewed concerns about the Chinese economy after a report from the Financial Times said the government has decided to abandon attempts to boost the stock market through large-scale share purchases.

Senior regulatory officials told the Financial Times China's leaders feel they mishandled their efforts to rescue the stock market.

The Chinese government resumed large-scale stock buying late in the trading day last Thursday to help the Shanghai Composite Index close sharply higher, but officials said the government will refrain from further large-scale buying of equities.

On the U.S. economic front, MNI Indicators released a report showing that business activity in the Chicago area unexpectedly grew at a slower rate in the month of August.

MNI Indicators said its Chicago business barometer dipped to 54.4 in August from 54.7 in July. While a reading above 50 indicates growth, economists had expected the index to inch up to 54.9.

Trading activity has remained somewhat subdued, however , with traders looking ahead to the release of several key economic reports in the coming days.

The monthly jobs report due on Friday may be the highlight of the week, but traders are also likely to keep an eye on reports on manufacturing and service sector activity, construction spending, and international trade as well as the Federal Reserve's Beige Book.

Gold stocks have shown a significant move to the downside, dragging the NYSE Arca Gold Bugs Index down by 2.7 percent. The weakness in the sector comes as gold for December delivery is falling $5.40 to $1,128.60 an ounce.

Utilities, natural gas, and steel stocks are also seeing notable weakness, while most of the other major sectors are showing more modest moves.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while China's Shanghai Composite Index fell by 0.8 percent.

The major European markets are also seeing some weakness on the day. The French CAC 40 Index is down by 0.7 percent, while the German DAX Index is down by 0.8 percent. The markets in the U.K. are closed for a holiday.

In the bond market, treasuries are regaining ground following some recent weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.5 basis points at 2.151 percent.