(RTTNews) – After moving sharply lower at the start of trading on Monday, stocks have regained ground over the course of the session. The major averages have climbed well off their lows of the session, with the Dow briefly peeking above the unchanged line.
Currently, the major averages are all in negative territory. The Dow is down 23.28 points or 0.1 percent at 42,631.46, the S&P 500 is down 20.58 points or 0.4 percent at 5,937.80 and the Nasdaq is down 105.90 points or 0.6 percent at 19,105.20.
The initial weakness on Wall Street came as traders looked to cash in on last week’s rally, which lifted the major averages to their best closing levels in over two months.
Last Monday’s news of a U.S.-China trade deal temporarily slashing steep tariffs on each other’s goods generated considerable buying interest that carried over throughout much of the week.
Negative sentiment was also generated in reaction to news that Moody’s has downgraded the U.S. debt rating by a notch to Aa1 from Aaa.
Moody’s said the downgrade reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.
Selling pressure has waned over the course of the session, however, as traders seem to remain generally optimistic about the outlook for the markets.
On the U.S. economic front, he Conference Board released a report showing its reading on leading U.S. economic indicators slumped by more than expected in the month of April.
The report said the leading economic index tumbled by 1.0 percent in April after sliding by a downwardly revised 0.8 percent in March.
Economists had expected the leading economic index to decrease by 0.8 percent compared to the 0.7 percent drop originally reported for the previous month.
Despite the recovery attempt by the broader markets, oil service stocks continue to see significant weakness on the day, with the Philadelphia Oil Service Index slumping by 2.1 percent.
Oil service, housing and semiconductor stocks are also seeing notable weakness, while gold stocks have shown a strong move to the upside along with the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index fell by 0.7 percent, while South Korea’s Kospi slid by 0.9 percent.
Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index is up by 0.3 percent, the U.K.’s FTSE 100 Index is down by 0.1 percent and the French CAC 40 Index is down by 0.3 percent.
In the bond market, treasuries have moved to the downside in reaction to Moody’s downgrading the U.S. credit rating. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.0 basis points at 4.499 percent.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
