Nasdaq Moves Sharply Lower In Morning Trading, Dow Posting Modest Loss

Stocks have moved mostly lower in morning trading on Monday after ending the previous session nearly unchanged. The major averages have all moved to the downside, with the tech-heavy Nasdaq showing a particularly steep drop.

The Dow has climbed well off its worst levels of the day but remained down 99.44 points or 0.3 percent at 31,394.88. The Nasdaq is down 199.43 points or 1.4 percent at 13,675.03 and the S&P 500 is down 25.34 points or 0.7 percent at 3,881.37.

The weakness on Wall Street partly reflects concerns about the outlook for inflation following the recent advance by bond yields.

The yield on the benchmark ten-year note ended last Friday’s trading at its highest closing level in almost a year and is currently hovering near the same level.

Bond yields remain at historically low levels, but the recent increase may still spook investors already concerned that stocks are overbought.

Traders are also looking ahead to two days of Congressional testimony by Federal Reserve Chair Jerome Powell.

Powell is likely to reiterate that the Fed plans to maintain easy monetary policy for the foreseeable future as the economy continues to recover from the coronavirus pandemic.

The Fed has recently signaled that it is not concerned about inflation, suggesting that inflation should exceed its 2 percent target for some time before the central bank considers raising interest rates.

Software stocks have moved sharply lower in morning trading, dragging the Dow Jones U.S. Software Index down by 2.1 percent.

Considerable weakness has also emerged among utilities stocks, resulting in a 1.6 percent drop by the Dow Jones Utility Average. The average has fallen to its lowest intraday level in well over a month.

Telecom, retail and healthcare stocks have also shown notable moves to the downside over the course of morning trading.

On the other hand, airline stocks are extending the rally seen in the previous session, with the NYSE Arca Airline Index soaring by 4.2 percent to its best intraday level in a year.

Energy and gold stocks are also seeing significant strength on the day, moving sharply higher along with the prices of crude oil and gold.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.5 percent. China’s Shanghai Composite Index tumbled by 1.5 percent, while South Korea’s Kospi fell by 0.9 percent.

Meanwhile, the major European markets have climbed off their worst levels but continue to see modest weakness. While the French CAC 40 Index is down by 0.1 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both down by 0.3 percent.

In the bond market, treasuries have moved slightly higher over the course of the morning. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 1.331 percent.

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