Profit Taking Contributes To Early Weakness On Wall Street - U.S. Commentary

(RTTNews) - Stocks have moved to the downside in early trading on Monday, giving back some ground after moving mostly higher last week. The major averages have all dipped into negative territory, although selling pressure has remained somewhat subdued.

Currently, the major averages are posting moderate losses. The Dow is down 21.29 points or 0.1 percent at 17,258.45, the Nasdaq is down 24.75 points or 0.5 percent at 4,555.04 and the S&P 500 is down 7.34 points or 0.4 percent at 2,003.06.

The early weakness on Wall Street is partly due to profit taking following the recent strength in the markets, which lifted the Dow and the S&P 500 to new record highs last week.

Negative sentiment has also been generated by comments from Chinese Finance Minister Lou Jiwei indicating that China won't dramatically alter its economic policy despite signs of downward pressure on growth.

Peter Boockvar, managing director at the Lindsey Group, said, "With the current slowdown in economic activity in China mostly due to the air coming out of the property market bubble, many assume Chinese officials will just provide another round of massive stimulus."

"Instead, however, we've gotten only small doses and it looks like that will be the most we'll see as China realizes that it must wean itself off the vicious cycle of stimulus, slowdown, stimulus, slowdown, etc.," he added.

Additionally, the National Association of Realtors recently released a report showing an unexpected drop in U.S. existing home sales in the month of August.

NAR said existing home sales fell 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August from a downwardly revised 5.14 million in July.

The drop came as a surprise to economists, who had expected existing home sales to climb to an annual rate of 5.18 million from the 5.15 million originally reported for the previous month.

Gold stocks are turning in some of the market's worst performances in early trading, extending a recent downward trend. The NYSE Arca Gold Bugs Index has fallen by 2.1 percent to its lowest intraday level in well over three months.

Steel, internet, airline, and energy 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 slumped by 0.7 percent, while Hong Kong's Hang Seng Index tumbled by 1.4 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.8 percent, the French CAC 40 Index and the German DAX Index are both down by 0.2 percent.

In the bond market, treasuries are seeing modest strength, climbing further off their recent lows. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 2.573 percent.