Profit Taking Contributes To Sharp Pullback On Wall Street
Stocks moved notably lower during trading on Monday, giving back ground following the rally seen on Wall Street last week. The major averages all showed significant moves to the downside, with the tech-heavy Nasdaq leading the drop.
The Nasdaq and the S&P 500 fell to new lows for the session going into the close of trading. The Dow slumped 320.04 points or 0.9 percent to 35,650.95, the Nasdaq plunged 217.32 points or 1.4 percent to 15,413.28 and the S&P 500 tumbled 43.05 points or 0.9 percent to 4,668.97.
The pullback on Wall Street may partly have reflected profit taking, as traders cashed in on some of the strength seen in the markets last week.
The major averages all moved sharply higher last week, with the S&P 500 ending last Friday’s trading at a new record closing high.
Traders may also have been moving money out of stocks and into safer havens ahead of the Federal Reserve’s money policy announcement on Wednesday.
The Fed is expected to discuss accelerating the pace of tapering its asset purchase program, with reports suggesting the central bank could double the rate to $30 billion per month.
Oil service stocks saw substantial weakness on the day, resulting in a 4.6 percent nosedive by the Philadelphia Oil Service Index.
The sell-off by oil service stocks came amid a decrease by the price of crude oil, as crude for January delivery fell $0.38 to $71.29 a barrel.
Considerable weakness was also visible among airline stocks, with the NYSE Arca Airline Index tumbling by 3.2 percent.
Semiconductor stocks also showed a significant move to the downside, dragging the Philadelphia Semiconductor Index down by 2.6 percent.
Oil producer, banking and computer hardware stocks also moved notably lower, while strength emerged among biotechnology, pharmaceutical and utilities stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index climbed by 0.7 percent, while Hong Kong’s Hang Seng Index dipped by 0.2 percent.
Meanwhile, European stocks moved mostly lower over the course of the session. While the German DAX Index closed just below the unchanged line, the French CAC 40 Index and the U.K.’s FTSE 100 Index slid by 0.7 percent and 0.8 percent, respectively.
In the bond market, treasuries moved to the upside after ending last Friday’s trading nearly unchanged. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.5 basis points to 1.424 percent.
A report on producer price inflation may attract attention on Tuesday, although trading activity is likely to be somewhat subdued ahead of the Fed announcement on Wednesday.
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