Stocks Turn Mixed After Seeing Early Weakness - U.S. Commentary

(RTTNews) - After moving mostly lower earlier in the session, stocks are turning in a mixed performance in mid-day trading on Monday. The tech-heavy Nasdaq has bounced back into positive territory, while the Dow and the S&P 500 are in the red.

Currently, the major averages remain on opposite sides of the unchanged line. While the Nasdaq is up 4.18 points or 0.1 percent at 5,132.46, the Dow is down 71.25 points or 0.4 percent at 17,618.61 and the S&P 500 is down 1.97 points or 0.1 percent at 2,101.87.

The weakness seen in early trading came following the release of some disappointing economic data, including a report from the Institute for Supply Management showing that activity in the manufacturing sector unexpectedly grew at a slower rate in July.

The ISM said its purchasing managers index dipped to 52.7 in July from 53.5 in June, although a reading above 50 indicates continued growth in the manufacturing sector.

The decrease came as a surprise to economist, who had expected the manufacturing index to inch up to a reading of 53.7.

Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel reflect a combination of optimism mixed with uncertainties about international markets and the impacts of the continuing decline in oil prices."

The Commerce Department also released a separate report showing a much smaller than expected increase in construction spending in the month of June.

Selling pressure remained somewhat subdued, however, with traders seemingly reluctant to make any significant moves.

Traders may be looking ahead to the monthly jobs report due on Friday, which could have a significant impact on the outlook for whether the Federal Reserve will raise interest rates at its next meeting in September.

Last week, analysts highlighted the inclusion of the word "some" in the Fed's assessment that it would be appropriate to raise rates "when it has seen some further improvement in the labor market."

Sector News

Gold stocks continue to see substantial weakness on the day, with the NYSE Arca Gold Bugs Index tumbling by 3.5 percent. With the drop, the index is on pace to end the session at a twelve-year closing low.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, as gold for December delivery is falling $4.70 to $1,090.40 an ounce.

Significant weakness also remains visible among electronic storage stocks, as reflected by the 1.6 percent loss being posted by the NYSE Arca Disk Drive Index. Datalink (DTLK) has helped to lead the sector lower, plunging by 6.1 percent.

Energy stocks are also seeing notable weakness in mid-day trading, as the price of crude oil for September delivery is sliding $1.16 to $45.96 a barrel.

On the other hand, airline stocks have shown a strong move to the upside on the day, driving the NYSE Arca Airline Index up by 1.9 percent. United Continental (UAL) and Southwest (LUV) are posting strong gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index fell by 0.9 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the French CAC 40 Index advanced by 0.8 percent and the German DAX Index surged up by 1.2 percent.

In the bond market, treasuries have moved higher, extending the strong upward move seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.7 basis points at 2.168 percent.