Stocks Close Mostly Lower Amid Overseas Worries - U.S. Commentary

(RTTNews) - After experiencing choppy trading last week due to the Thanksgiving Day holiday, stocks moved mostly lower during trading on Monday. Worries about developments overseas weighed on the markets, overshadowing upbeat U.S. manufacturing data.

The major averages all closed in the red, with the tech-heavy Nasdaq posting a particularly steep loss. While the Nasdaq tumbled 64.28 points or 1.3 percent to 4,727.35, the S&P 500 slid 14.12 points or 0.7 percent to 2,053.44 and the Dow fell 51.44 points or 0.3 percent to 17,776.80.

The weakness on Wall Street came on the heels of news that credit ratings agency Moody's downgraded Japan's debt rating by one notch to A1 from Aa3.

Moody's said the outlook is stable but warned of heightened uncertainty over the achievability of Japan's deficit reduction goals as well as uncertainty over the timing and effectiveness of its growth enhancing policy measures.

A report released by China's Bureau of National Statistics showing that their reading on manufacturing activity in November was downwardly revised to 50.3 from 50.5 also weighed on the markets.

Negative sentiment was also generated by indications of lower holiday spending over the vital Thanksgiving weekend.

The National Retail Federation said total spending is expected to reach $50.9 billion, down 11.3 percent from last year's estimated $57.4 billion.

However, Peter Boockvar, managing director at the Lindsey Group, cautioned that online purchases and constant discounting make the overall holiday shopping season impossible to call this early on.

Traders largely shrugged off a report from the Institute for Supply Management showing that its index of U.S. manufacturing activity fell by much less than anticipated in the month of November.

The ISM said its purchasing managers index edged down to 58.7 in November from 59.0 in October, with a reading above 50 indicating continued growth in the manufacturing sector.

Economists had expected the ISM's manufacturing index to show a somewhat more significant decrease to a reading of 57.8.

Sector News

Railroad stocks saw substantial weakness on the day, dragging the Dow Jones Railroads Index down by 2.9 percent. The index added to the 4.8 percent loss that it posted last Friday, pulling back further off last Thursday's record closing high.

The sell-off seen by railroad stocks over the past two sessions reflected concerns about the impact that the recent sharp drop in oil prices will have on the industry.

Significant weakness was also visible among steel stocks, as reflected by the 2.2 percent loss posted by the NYSE Arca Steel Index. With the drop, the index fell to its lowest closing level in over a year.

AK Steel (AKS), Cliffs Natural Resources (CLF), and A.M. Castle (CAS) turned in some of the steel sector's worst performances.

Internet, computer hardware, and semiconductor stocks also saw considerable weakness on the day, contributing to the steep loss posted by the tech-heavy Nasdaq.

Most of the other major sectors also moved to the downside, although gold stocks bucked the downtrend amid a sharp increase by the price of the precious metal.

With gold for February delivery surging up $42.60 to $1,218.10 an ounce, the NYSE Arca Gold Bugs Index jumped by 7.9 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index tumbled by 2.6 percent and 2 percent, respectively. However, Japan's Nikkei 225 Index bucked the downtrend and advanced by 0.8 percent.

The major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1 percent, the French CAC 40 Index and the German DAX Index dipped by 0.3 percent and 0.2 percent, respectively.

In the bond market, treasuries turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.4 basis points to 2.218 percent.

Looking Ahead

While the Commerce Department is scheduled to release a report on construction spending on Tuesday, trading activity may be somewhat subdued ahead of the release of more closely watched data in the coming days.