Stocks Move To The Downside, Tech-Heavy Nasdaq Underperforms - U.S. Commentary

(RTTNews) - Stocks have moved to the downside in early trading on Monday, adding to the losses posted last week. The major averages have all slid into negative territory, although the tech-heavy Nasdaq is underperforming its counterparts.

Currently, the major averages remain stuck in the red. The Dow is down 23.73 points or 0.1 percent at 16,963.78, the Nasdaq is down 39.03 points or 0.9 percent at 4,528.57 and the S&P 500 is down 6.06 points or 0.3 percent at 1,979.48.

Uncertainty ahead of the Federal Reserve's monetary policy announcement on Wednesday is contributing to the early weakness on Wall Street.

The Fed is widely expected to announce a further reduction in the pace of its asset purchases, although traders are likely to pay closer attention to any suggestions regarding the outlook for interest rates.

Recent upbeat economic data has led to some concerns that the Fed may signal that it plans to begin raising rates sooner than previously anticipated.

Traders are also digesting some disappointing Chinese economic reports as well as a mixed batch of U.S. economic data.

The Chinese National Bureau of Statistics reported weaker than expected retail sales growth in August, while a separate report showed that Chinese industrial output also rose by less than expected.

On the U.S. economic front, the New York Federal Reserve released a report showing that business activity in the New York manufacturing sector has expanded at a robust pace in September.

The New York Fed said its headline general business conditions index surged up to 27.5 in September from 14.7 in August, with a positive reading indicating an increase in activity in the New York manufacturing sector. Economists had expected the index to edge up to 16.0.

With the much bigger than expected increase, the general business conditions index reached its highest level since hitting 32.6 in October of 2009.

Meanwhile, a separate report released by the Federal Reserve showed an unexpected drop in industrial production in the month of August.

The Fed said industrial production edged down by 0.1 percent in August after inching up by a downwardly revised 0.2 percent in July.

The modest drop came as a surprise to economists, who had expected production to climb by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Biotechnology stocks have shown a significant move to the downside, dragging the NYSE Arca Biotechnology Index down by 1.5 percent. Exact Sciences (EXAS), Nektar Therapeutics (NKTR) and Gilead Sciences (GILD) are posting notable losses.

Electronic storage, internet, and networking stocks are also seeing considerable weakness, contributing to the steep loss being posted by the Nasdaq.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, although the Japanese markets were closed for a holiday. Hong Kong's Hang Seng Index and Australia's All Ordinaries Index both dropped by 1 percent.

The major European markets have also moved to the downside on the day. The French CAC 40 Index has fallen by 0.5 percent, while the U.K.'s FTSE 100 Index and the German DAX Index are down by 0.2 percent and 0.1 percent, respectively.

In the bond market, treasuries are regaining some ground after seeing considerable weakness in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.1 basis points at 2.583 percent.