Stocks Fall Sharply In Holiday-Shortened Session - U.S. Commentary

(RTTNews) - Stocks showed another substantial move to the downside in a holiday-shortened session on Monday, extending the sell-off seen over the past several sessions. With the steep drop on the day, the major averages once again tumbled to their lowest closing levels in well over a year.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow plummeted 653.17 points or 2.9 percent to 21,792.20, the Nasdaq tumbled 140.08 points or 2.2 percent to 6,192.92 and the S&P 500 plunged 65.52 points or 2.7 percent to 2,351.10.

The continued weakness on Wall Street reflected recent downward momentum, although trading activity was somewhat subdued ahead of the Christmas Day holiday on Tuesday.

Many traders remained away from their desks to get a head start on the holiday, with the markets closing three hours earlier than usual.

Nonetheless, today marked the first day traders had an opportunity to react to the partial government shutdown that took effect at midnight last Friday.

The partial shutdown is likely to continue until after Christmas, as President Donald Trump and Democratic lawmakers remain "far apart" on the issue of funding for the president's controversial border wall.

The Senate adjourned Saturday without a deal to re-open the shut down parts of the federal government and is not expected to reconvene until Thursday, December 27th.

The ongoing shutdown comes after Vice President Mike Pence met with Senate Minority Leader Chuck Schumer, D-N.Y., but a spokesman for the Democratic leader said, "Unfortunately, we're still very far apart."

Senate Majority Leader Mitch McConnell, R-Ken., noted party leaders have pushed the "pause button" on holding votes until Trump and Democrats reach an agreement.

The economic calendar for the week started off quiet due to the holiday on Tuesday, although reports on new home sales, consumer confidence, and pending home sales may attract attention later in the week.

Sector News

Interest rate-sensitive utilities stocks turned in some of the market's worst performances on the day, resulting in a 4.2 percent nosedive by the Dow Jones Utilities Average. The average plunged to its lowest closing level in six months.

The sell-off by utilities stocks came as Trump continued to attack the Federal Reserve for raising interest rates, calling the Fed the "only problem" for the economy.

Considerable weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil. Crude for February delivery has tumbled $1.52 to $44.07 a barrel.

Commercial real estate, software, and chemical stocks also saw significant weakness, reflecting 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 jumping by 3.4 percent. The rally by gold stocks came amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed. China's Shanghai Composite Index rose by 0.4 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets moved lower in a holiday-shortened session. The French CAC 40 Index tumbled by 1.5 percent and the U.K.'s FTSE 100 Index fell by 0.5 percent. Markets in Germany were closed on the day.

In the bond market, treasuries have moved to the upside as traders looked for safe havens amid the continued sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has fallen by 4.3 basis points to 2.749 percent.

Looking Ahead

Following the holiday on Tuesday, trading activity may remain subdued on Wednesday amid a quiet day on the U.S. economic front. A report on home prices in major metropolitan areas may attract some attention.