Stocks Remain Firmly Negative In Mid-Day Trading - U.S. Commentary

(RTTNews) - After falling sharply early in the session, stocks continue to see considerable weakness in afternoon trading on Tuesday. The pullback on the day comes after the major averages closed mixed for five consecutive sessions.

The major averages have moved roughly sideways in recent trading, stuck firmly in negative territory. The Dow is down 116.97 points or 0.6 percent at 18,287.54, the Nasdaq is down 57.71 points or 1.1 percent at 5,126.48 and the S&P 500 is down 18.33 points or 0.8 percent at 2,152.51.

Weakness overseas has weighed on the U.S. markets, with European stocks showing a notable move to the downside on the day.

European banking stocks helped to lead the way lower, as traders remain skeptical about the results of the recently released stress test results.

The weakness overseas came even after Japanese Prime Minister Shinzo Abe's cabinet approved an economic stimulus package worth more than 28 trillion yen.

In U.S. economic news, the Commerce Department released a report before the start of trading showing that personal spending increased by slightly more than expected in the month of June.

The report said personal spending climbed by 0.4 percent in June, matching the increase seen in May. Spending had been expected to rise by about 0.3 percent.

Meanwhile, the Commerce Department also said personal income edged up by 0.2 percent for the second straight month. Economists had expected income to increase by 0.3 percent.

Overall trading activity has remained somewhat subdued, as traders continue to look ahead to some key events later this week.

The Bank of England's monetary policy decision on Thursday is likely to be in focus along with the monthly U.S. jobs report due on Friday.

Sector News

Airline stocks have moved sharply lower on the day, dragging the NYSE Arca Airline Index down by 3.4 percent. With the drop, the index has fallen to its lowest intraday level in almost a month.

Delta Air Lines (DAL) has helped to lead the sector lower, tumbling by 6.7 percent after reporting a 7.0 percent year-over-year decline in consolidated passenger unit revenue.

Biotechnology stocks have also come under pressure, giving back ground following recent strength. The NYSE Arca Biotechnology Index is down by 2.1 percent after ending the previous session at a nearly seven-month closing high.

Significant weakness is also visible among computer hardware stocks, as reflected by the 1.7 percent loss being posted by the NYSE Computer Hardware Index. The index is pulling back further off the eight-month closing high it set last Thursday.

Data storage company Seagate Technology (STX) is posting a steep loss after reporting fourth quarter earnings and revenues that fell year-over-year.

Brokerage, telecom, and semiconductor stocks are also seeing notable weakness, while gold stocks are among the few groups bucking the downtrend amid an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1.5 percent, while Australia's All Ordinaries Index fell by 0.9 percent. The Hong Kong market was closed due to a typhoon warning.

The major European markets also came under pressure on the day. While the U.K.'s FTSE 100 Index fell by 0.7 percent, the German DAX Index and the French CAC 40 Index both slumped by 1.8 percent.

In the bond market, treasuries have climbed off their lows for the session but remain in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.6 basis points at 1.542 percent.