Stocks Show Modest Move To The Downside - U.S. Commentary

(RTTNews) - Stocks saw modest weakness during trading on Monday following the upward move seen in the previous week. The tech-heavy Nasdaq reached a record intraday high in early trading but pulled back to end the day slightly lower.

The major averages all closed in negative territory, although the Nasdaq edged down just 2.30 points or less than a tenth of a percent to 6,698.96. The Dow slid 85.45 points or 0.4 percent to 23,348.74 and the S&P 500 fell 8.24 points or 0.3 percent to 2,572.83.

The pullback by stocks was partly attributed to a report from Bloomberg indicating House tax writers are discussing a gradual phase-in for the corporate tax-rate cut.

Citing a member of the House's tax-writing committee and a person familiar with the discussions, Bloomberg said the plan would have the corporate tax rate reach 20 percent in 2022.

Nonetheless, traders seemed reluctant to make more significant moves ahead of the release of some key economic data and earnings news in the coming days.

The monthly jobs report due to be released on Friday is likely to be in focus, with employment expected to jump by 323,000 jobs.

Reports on consumer confidence, manufacturing and service sector activity, and labor productivity and costs may also attract attention.

The Fed is also due to announce its monetary policy decision on Wednesday, although the central bank is widely expected to leave interest rates unchanged.

On the earnings front, Apple (AAPL), Kellogg (K), MasterCard (MA), Pfizer (PFE), Clorox (CLX), Facebook (FB), DowDuPont (DWDP), Yum! Brands (YUM), and Starbucks (SBUX) are among the companies due to report their quarterly results this week.

Before the start of trading, the Commerce Department released a report showing personal income rose in line with economist estimates in the month of September, while personal spending jumped more than expected.

The report said personal income climbed by 0.4 percent in September after edging up by 0.2 percent in August. The increase in income matched economist estimates.

The Commerce Department also said personal spending surged up by 1.0 percent in September following a 0.1 percent uptick in August. Economists had expected spending to increase by 0.8 percent.

Sector News

Trucking stocks showed a significant move to the downside on the day, dragging the Dow Jones Trucking Index down by 2.8 percent. The index pulled back off the record closing high set last Thursday.

Heartland Express (HTLD), J.B. Hunt Transport Services (JBHT) and Landstar (LSTR) turned in some of the trucking sector's worst performances.

Considerable weakness was also visible among steel stocks, as reflected by the 1.6 percent loss posted by the NYSE Arca Steel Index. Brazil's CSN (SID), Gerdau (GGB), and L.B. Foster (FSTR) posted notable losses.

Telecom, healthcare, and tobacco stocks also moved lower on the day, while oil service and gold stocks moved to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index closed just above the unchanged line, while Hong Kong's Hang Seng Index fell by 0.4 percent.

The major European markets also finished the day mixed. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index closed just below the unchanged line and the U.K.'s FTSE 100 Index dipped by 0.2 percent.

In the bond market, treasuries showed a notable move to the upside over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.4 basis points to 2.374 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to reports on home prices, consumer confidence, and Chicago-area business activity.

Earnings news may also attract attention, with Pfizer (PFE), Aetna (AET), Kellogg (K), and Sony (SNE) among a slew of companies due to report their quarterly results before the start of trading.