U.S. Stocks Give Back Ground After Last Week’s Rally

After coming under pressure early in the session, stocks staged a recovery attempt in mid-day trading on Monday but moved back to the downside as the day progressed. The major averages all finished the session firmly in negative territory.

The Dow slumped 427.09 points or 0.9 percent to 47,289.33, the Nasdaq fell 89.76 points or 0.4 percent to 23,275.92 and the S&P 500 slid 36.46 points or 0.5 percent to 6,812.63.

The weakness on Wall Street comes as some traders looked to cash in on last week’s rally, which saw the major averages stage a significant recovery from the sharp pullback seen earlier in November.

The major averages had closed higher for five consecutive sessions, clawing their way back toward their record highs.

Stocks have recently benefitted from renewed optimism about the outlook for interest rates following dovish comments from leading Federal Reserve officials.

CME Group’s FedWatch Tool is currently indicating an 87.6 percent chance the Fed will lower interest rates by another quarter point at its monetary policy meeting next week.

However, the release of key U.S. economic data in the coming days could impact Fed officials’ thinking, potentially keeping traders on edge.

The Institute for Supply Management released a report this morning unexpectedly showing a modest decrease by its reading on U.S. manufacturing activity in the month of November.

The ISM said its manufacturing PMI slipped to 48.2 in November from 48.7 in October, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.0.

Sector News

Utilities stocks showed a significant move to the downside on the day, dragging the Dow Jones Utility Average down by 2.3 percent to its lowest closing level in two months.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 2.1 percent slump by the NYSE Arca Biotechnology Index.

Networking, healthcare and computer hardware stocks also showed notable moves to the downside, while energy stocks bucked the downtrend amid a sharp increase by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index tumbled by 1.9 percent, while China’s Shanghai Composite Index climbed by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index slumped by 1.0 percent, the French CAC 40 Index fell by 0.3 percent and the U.K.’s FTSE 100 Index dipped by 0.2 percent.

In the bond market, treasuries moved notably lower, extending the pullback seen during last Friday’s session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 7.9 basis points to 4.096 percent.

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