Stocks Climb Off Worst Levels But Close Firmly In The Red - U.S. Commentary

(RTTNews) - Following the sell-off seen last Friday, stocks saw continued weakness during trading on Monday. With the losses on the day, the Nasdaq and the S&P 500 ended the session at their lowest closing levels in well over a year.

The major averages climbed well off their worst levels in late trading but still closed firmly in the red. The Dow dropped 177.2 points or 1.1 percent to 16,027.05, the Nasdaq tumbled 79.39 points or 1.8 percent to 4,283.75 and the S&P 500 slumped 26.61 points or 1.4 percent to 1,853.44.

The sell-off on Wall Street was partly due to a decrease by the price of crude oil, with crude for March delivery slumping $1.20 to $29.69 a barrel a barrel.

Crude oil prices extended the steep drop seen last week, when the commodity tumbled $2.73 or 8.1 percent to $30.89 a barrel amid concerns about global oversupply.

The decrease by the price of crude oil also reflected concerns about the outlook for the global economy, which led to substantial weakness among European stocks.

Trading activity on the day was somewhat, however, with some traders staying on the sidelines amid a lack of major U.S. economic data.

The economic calendar remains relatively quiet throughout much of the week, although reports on retail sales, import and export prices, and consumer sentiment are all due to be released on Friday.

Traders are also likely to keep an eye on remarks by Federal Reserve Chair Janet Yellen, who is scheduled to deliver her semi-annual testimony to Congress on Wednesday and Thursday.

On the earnings front, Coca-Cola (KO), Disney (DIS), Time Warner (TWX), Cisco (CSCO), Twitter (TWTR), Kellogg (K), and PepsiCo (PEP) are among the companies due to report their quarterly results this week.

Sector News

Natural gas stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Natural Gas Index down by 4.4 percent.

Williams Co. (WMB) and Chesapeake Energy (CHK) turned in two of the natural gas sector's worst performances on the day, tumbling by 34.8 percent and 33.3 percent, respectively.

Considerable weakness was also visible among housing stocks, as reflected by the 3.5 percent drop by the Philadelphia Housing Sector Index. With the loss, the index fell to its lowest closing level in over a year.

Telecom, internet, biotechnology, computer hardware and banking stocks also saw significant weakness amid another broad-based sell-off on Wall Street.

Meanwhile, gold stocks were among the few groups to buck the downtrend, with the NYSE Arca Gold Bugs Index surging up by 3 percent amid a jump by the price of the precious metal.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region were closed on Monday due to the Lunar New Year holiday. However, Japan's Nikkei 225 Index surged up by 1.1 percent, while Australia's All Ordinaries Index edged down y 0.1 percent.

Meanwhile, the major European markets showed substantial moves to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 2.7 percent, the French CAC 40 Index and the German DAX Index plummeted by 3.2 percent and 3.3 percent, respectively.

In the bond market, treasuries moved sharply higher amid the continued weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 11.3 basis points to 1.735 percent.

Looking Ahead

On Tuesday, trading may be impacted by the release of a Commerce Department report on wholesale inventories as well as earnings news from Coca-Cola, CVS Health (CVS), Goodyear Tire (GT), Viacom (VIAB), and Wendy's (WEN).