(RTTNews) - After moving sharply lower at the open, stocks continue to see substantial weakness in mid-day trading on Monday. Lingering concerns about the ongoing European debt crisis are weighing on the markets amid worries about the impact on the global economy.
The major averages are currently posting steep losses, just off their worst levels of the day. The Dow is down 165.59 points or 1.3 percent at 12,475.19, the Nasdaq is down 59.32 points or 2.1 percent at 2,833.10 and the S&P 500 is down 24.04 points or 1.8 percent at 1,310.98.
The sell-off on Wall Street comes as traders are keeping a close eye on the latest developments in Europe, where Spain formally asked for a bailout to shore up its ailing banking sector.
Europe is likely to remain in focus throughout the week, as European leaders are due to hold a summit to discuss the ongoing debt crisis on Thursday and Friday.
Peter Boockvar, managing director at Miller Tabak, said, "With Germany just not giving in to the requests for largesse that the rest of Europe wants them to disperse in the form of socializing debt obligations in the Euro region, nothing of substance will come out of the Thurs/Fri EU summit and markets today are realizing that."
"Without German allowance money, pressure will then build on the ECB to print money to the obvious dismay of the Germans," he added.
Meanwhile, traders have largely shrugged off a report from the Commerce Department showing a bigger than expected increase in U.S. new home sales.
The report showed sales of new single-family homes at a seasonally adjusted annual rate of 369,000 in May, a 7.6 percent increase from the revised April rate of 343,000. Economists had expected new home sales to climb to 350,000.
With the bigger than expected increase, new home sales came in at their strongest rate since April of 2010.
Sector News
Most of the major sectors have come under pressure on the day, reflecting the broad based weakness visible on Wall Street.
Oil service stocks are posting particularly steep losses, moving lower along with the price of crude oil. With crude for August delivery sliding $1.42 to $78.34 a barrel, the Philadelphia Oil Service Index is down by 3.8 percent.
Significant weakness is also visible among networking stocks, as reflected by the 3.5 percent loss being posted by the NYSE Arca Networking Index. Emulex (ELX) and Alcatel-Lucent (ALU) are turning in two of the sector's worst performances.
Steel stocks are also seeing substantial weakness amid concerns about the economic outlook, with the NYSE Arca Steel Index down by 3.5 percent. Brokerage, semiconductor, electronic storage, and airline stocks are also posting steep losses.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index fell by 0.7 percent, while Hong Kong's Hang Seng Index ended the day down by 0.5 percent.
The major European markets also showed significant moves to the downside on the day. While the U.K.'s FTSE 100 Index tumbled by 1.1 percent, while the German DAX Index and the French CAC 40 Index plummeted by 2.1 percent and 2.2 percent, respectively.
In the bond market, treasuries have moved notably higher amid the weakness among stocks. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.4 basis points at 1.608 percent.
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I played with small silver and gold holdings and am 'stuck" with some AG's that are mired due to the condition of the silver market. That includes SVM, some GPL, HL, and with a tiny amount of AUY and NSU to watch and compare against everything else. I have had IAU and PHYS. I noted strange excursions up and down on AUY which didn't match anything else in the AG stock family. Why that happened requires a bit of explanation as some of it may involve a bit of manipulation of a combined gold and silver producer. Nonetheless I am lusting and leching over the chance to see my silver holdings come into their own which is expected between 2012 and 2013.
I think AUY has a downside target of $11.70/share per Elliot 5th wave. May be a good ride back up from there, if so.
Thanks for letting me know, Dennis. I'm holding AUY, selling covered calls to get some losses back. That is a long ride down. I was wonder when I should buy more to dollar cost average. Appreciate your post.
Words are very important and the choice of words at the highest level is extra important. There is this word out of BIS meeting that is very interesting. They say that intervention of central banks is "a Palliative". It´s a word you don´t see too often. But it carries a heavy meaning. To relieve or lessen without curing; mitigate; alleviate. Or to try to mitigate or conceal the gravity of (an offense) by excuses, apologies, etc.; extenuate.
As when administering chemotherapy to a patient with terminal cancer to ameliorate the pain?
Yeah, what a grand idea! Would rather have "pakalolo."
Another drowsing by The Great Wall Street Casino of the unsuspecting fools who jumped in with both feet at the last "Rally". As I pointed out before, the INDU and the SPX 52-year-charts show either a massive triple-top or head-and-shoulders formation, depending on volume confirmation. Meantime, GOLD and SILVER appear to be approaching the SYA mode, kicked off by today's ADDITIONAL FUNDAMENTAL events
I remember your post, Carlos, and thank you for the reminder.
You are very welcome. I just hope to warn people who are, like I, not really good or adept at trading, but are would be investors, to hink three times before they jump into The Casino of today.
I am short this mkt etfs sds faz eur qid...from former ino tv video...and staying very liquid and mostly cash....gettin list ready for any rally but consider all trading daily or very few days...how do others feel???..i do like ung biol and xco and even chk...been making noney in nat gas.
Sarah, we are practically holding the same positions. I have ung and chk too. chk is taking a beating right now, but I'm reducing the loss by selling covered calls against the position. We're thinking along the same lines. Waiting for signal to get into gold and silver.
yes waiitng for gold silver and even oil ..not shorting though too volitile...have xco and sold ung profit bought fcg another eft in nat gas...also see se sd clne even crzo for nat gas plays...very long term...still like chk but the keepgetting into trouble with ethical issues...Jeremy or Adam, can you comment on nat gas sector...seem to be one of the few holding and ready for a long term opportunity to the upside
Sarah,
The Trade Triangles are currently long for short term traders Natural Gas according to our rules for trading futures. Longer term we are still negative this market and with a score of +60 short-term traders should be holding long positions with appropriate money management stops. Long term traders are still on the sidelines.
Best,
Jeremy
The BIS, the Capo di tutti capi of Central Banks, said fundamental progress would be secured when the "largest institutions can fail without the taxpayer having to respond" and when the size of the financial sector relative to the rest of the economy stays within tight limits. So, I think you can see where all these indicators are going.
And while this divergence occurred, money was busy driving down bond yields, in correlation with commodities but in contradiction to the stock market obviously. Again, a serious correction in stocks seems pretty imminent.
Usually there is pretty good correlation between stocks and commodities but this year there has been quite a sharp divergence in that the S&P 500 is posting some gain while CRB is down probably 15-20%. I guess a correction is inevitable and S&P will have to fall to 1050-1100 at least.
The start of minor wave 3 down may have confirmed today, next stop Oct lows...followed by a correction then we get pushed off a cliff.
Happy days ahead for the perma bears!