Stocks Close Lower But Well Off Worst Levels Of The Day - U.S. Commentary

(RTTNews) - After moving sharply lower at the start of trading on Monday, stocks regained some ground over the course of the trading session but still ended the day firmly in the red. The losses on the day came on the heels of the mixed performance seen last week.

The Dow ended the day down 107.67 points or 0.6 percent at 17,791.17 after falling as much as 200 points and hitting a two-month intraday low early in the session. The Nasdaq slid 21.13 points or 0.4 percent to 5,029.97, and the S&P 500 fell 9.68 points or 0.5 percent to 2,084.43.

The initial weakness on Wall Street came as talks between Greece and its international creditors once again broke down over the weekend.

The inability of the two sides to reach a compromise has led to worries about a potential Greek default at the end of the month.

A meeting of the European finance ministers scheduled for Luxembourg on Thursday could be a make-or-break session for Greece.

Negative sentiment was also generated by some disappointing U.S. economic data, including a report from the Federal Reserve showing an unexpected drop in industrial production in May.

The Fed said industrial production fell by 0.2 percent in May following a downwardly revised 0.5 percent decrease in April.

Economists had been expecting production to increase by 0.2 percent compared to the 0.3 percent drop originally reported for the previous month.

Separately, the New York Fed said its general business conditions index fell to a negative 2.0 in June from a positive 3.1 in May, with a negative reading indicating a contraction in regional manufacturing activity.

The decrease came as a surprise to economists, who had expected the general business conditions index to climb to a positive 5.9.

Meanwhile, the National Association of Home Builders released a report showing a substantial improvement in homebuilder confidence in the month of June.

The report said the NAHB/Wells Fargo Housing Market Index jumped to 59 in June from 54 in May. The index has been expected to show a more modest increase to a reading of 56.

With the bigger than expected increase, the housing market index reached its highest level since a matching reading in September of 2014.

Sector News

Steel stocks saw significant weakness on the day, dragging the NYSE Arca Steel Index down by 2.2 percent. With the drop, the index ended the session at a nearly two-month closing low.

Industry giant U.S. Steel (X) helped to lead the sector lower, tumbling 5.2 percent to its worst closing level in well over a month.

Considerable weakness was also visible among computer hardware stocks, as reflected by the 1.4 percent loss posted by the NYSE Arca Computer Hardware Index. Logitech (LOGI) and Hewlett-Packard (HPQ) posted notable losses.

Tobacco, airline, and software stocks also saw notable weakness on the day, while most of the other major sectors showed more modest moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index edged down by 0.1 percent, while Hong Kong's Hang Seng Index plunged by 1.5 percent.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index tumbled by 1.1 percent, the French CAC 40 Index and the German DAX Index plummeted by 1.8 percent and 1.9 percent, respectively.

In the bond market, treasuries moved moderately higher, climbing further off their recent lows. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 2.358 percent.

Looking Ahead

A report on housing starts may attract some attention on Tuesday, although traders may be reluctant to make any significant moves ahead of the Fed's monetary policy announcement on Wednesday.