Stocks Move Mostly Lower Following Disappointing Service Data - U.S. Commentary

(RTTNews) - After initially showing a lack of direction, stocks have moved mostly lower over the course of the trading session on Monday. The downward move on the day extends the pullback seen throughout the first few trading days on 2014.

The major averages have climbed off their worst levels of the day but currently remain in the red. The Dow is down 41.16 points or 0.3 percent at 16,428.83, the Nasdaq is down 19.00 points or 0.5 percent at 4,112.91 and the S&P 500 is down 5.38 points or 0.3 percent at 1,825.99.

The weakness on Wall Street partly reflects a negative reaction to a report from the Institute for Supply Management showing that activity in the U.S. service sector unexpectedly grew at a slower rate in the month of December.

The ISM said its non-manufacturing index edged down to 53.0 in December from 53.9 in November, although a reading above 50 still indicates growth in the service sector. With the drop, the index fell to its lowest level since hitting 52.8 in June.

The modest decrease came as a surprise to economists, who had been expecting the index to creep up to a reading of 54.8.

The unexpected decrease by the headline index was partly due to a downturn by new orders, as the new orders index tumbled to 49.4 in December from 56.4 in November.

However, Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, said, "Despite the substantial decrease in the New Orders Index, respondents' comments predominately reflect that business conditions are stable."

Traders seem to have shrugged off a separate report from the Commerce Department showing that factory orders rose by more than expected in November.

The report said factory orders increased by 1.8 percent in November following a revised 0.5 percent decrease in October. Economists had expected orders to rise by 1.6 percent.

The factory orders report may be viewed as old news considering that the data comes from before the Federal Reserve's recently announced decision to begin scaling back its asset purchases.

Sector News

Extending a pullback, steel stocks are turning in some of the market's worst performances in mid-day trading. The NYSE Arca Steel Index has fallen by 1.6 percent, pulling back further off the eleven-month closing high it set last Tuesday.

AK Steel (AKS) has helped to lead the steel sector lower, sliding by 5.8 percent, while Schnitzer Steel (SCHN) and Rio Tinto (RIO) are also posting notable losses.

Housing stocks are also seeing significant weakness on the day, as reflected by the 1.5 percent drop by the Philadelphia Housing Sector Index. The index continues to pull back off the seven-month closing high set on the last trading day of 2013.

Airline, software, and trucking stocks have also come under pressure, moving lower along with most of the other major sector.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 2.4 percent, while Hong Kong's Hang Seng Index ended the day down by 0.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index closed just above the unchanged line, the German DAX Index edged down by 0.1 percent and the French CAC 40 Index fell by 0.5 percent.

In the bond market, treasuries are moving to the upside after ending the previous session modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.7 basis points at 2.958 percent.