Stocks Regain Ground But Remain Mostly Negative - U.S. Commentary

(RTTNews) - After coming pressure early in the session, stocks have regained some ground over the course of the trading day on Monday. The major averages have climbed well off their worst levels of the day but remain in the red.

Currently, the major averages are posting moderate losses. The Dow is down 42.23 points or 0.3 percent at 16,600.78, the Nasdaq is down 13.52 points or 0.3 percent at 4,814.80 and the S&P 500 is down 6.54 points or 0.3 percent at 1,982.33.

The early weakness on Wall Street partly reflected 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.

Sector News

Despite the recovery attempt by the broader markets, substantial weakness remains visible among utilities stocks. Reflecting the weakness in the utilities sector, the Dow Jones Utilities Average is down by 2.4 percent.

Nextera Energy (NEE), FirstEnergy (FE), and Edison International (EIX) are turning in some of the utilities sector's worst performances.

Gold stocks also continue to see considerable weakness, with the NYSE Arca Gold Bugs Index down by 1.3 percent. The weakness in the sector comes amid a modest decrease by the price of gold.

Biotechnology and healthcare stocks are also seeing some weakness on the day, although selling pressure has waned from earlier in the session.

On the other hand, oil service stocks have shown a strong move to the upside, driving the Philadelphia Oil Service Index up by 2.1 percent. The strength in the sector comes as crude oil for October delivery is climbing $2.02 to $47.24 a barrel.

Electronic storage and natural gas stocks are also seeing significant strength, helping to limit the downside for the broader markets.

Other Markets

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 also moved to the downside on the day. The German DAX Index fell by 0.4 percent while the French CAC 40 Index dropped by 0.5 percent. The markets in the U.K. were closed for a holiday.

In the bond market, treasuries have pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 2.183 percent.