WASHINGTON (Alliance News) - After moving modestly higher at the open, stocks have turned lower over the course of early trading on Monday. The major averages have pulled back into negative territory, partly offsetting the strong gains posted last week.
Recently, the major averages have climbed off their lows for the young session, but they remain in the red. The Dow is down 16.75 points or 0.1% at 16,700.42, the Nasdaq is down 20.35 points or 0.5% at 4,222.26 and the S&P 500 is down 4.49 points or 0.2% at 1,919.08.
The pullback by stocks was partly due to the release of a report from the Institute for Supply Management showing an unexpected decrease by its reading on US manufacturing activity.
The ISM said its manufacturing index dipped to 53.2 in May from 54.9 in April. While a reading above 50 indicates continued growth in the manufacturing sector, economists had expected the index to climb to a reading of 55.5.
Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Comments from the panel reflect generally steady growth, but note some areas of concern regarding raw materials pricing and supply tightness and shortages."
A separate report from the Commerce Department also showed that construction spending rose by less than expected in the month of April.
The report said construction spending edged up 0.2% to annual rate of USD953.5 billion in April from the revised March estimate of USD951.6 billion. Economists had been expecting spending to increase by about 0.6%.
Networking, internet, and biotechnology stocks have come under pressure in early trading, contributing to a notable drop by the tech-heavy Nasdaq.
However, most of the other major sectors have shown more modest moves to the downside, as selling pressure has remained relatively subdued.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index surged up by 2.1%, while Australia's All Ordinaries Index rose by 0.5%. The markets in Hong Kong and mainland China were closed for holidays.
Meanwhile, the major European markets are turning in a mixed performance. While the UK's FTSE 100 Index has inched up by 0.1%, the French CAC 40 Index and the German DAX Index are down by 0.3% and 0.2%, respectively.
In the bond market, treasuries are seeing some weakness on the day but have climbed off their worst levels. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.4 basis points at 2.491%.
Original headline: Stocks Turn Lower Following Disappointing Manufacturing Data - US Commentary
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