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Stocks Move Mostly Lower Amid Trepidation Ahead Of Key Events - US Commentary

July 28, 2014

WASHINGTON (Alliance News) - Stocks have moved mostly lower in early trading on Monday after opening the session near the unchanged line. The major averages have slid firmly into negative territory, with the S&P 500 pulling back further off last Thursday's record closing high.

In the past few minutes, the major averages have edged up off their lows for the young session, but they remain in the red. The Dow is down 67.34 points or 0.4% at 16,893.23, the Nasdaq is down 23.30 points or 0.5% at 4,426.27 and the S&P 500 is down 8.67 points or 0.4% at 1,969.67.

The early weakness on Wall Street partly reflects trepidation ahead of some potentially market-moving events later in the week.

The Federal Reserve's monetary policy announcement on Wednesday and the release of the Labor Department's monthly jobs report on Friday are likely to be two major focal points for the markets.

However, traders are also likely to keep an eye on reports on second quarter GDP, manufacturing activity, consumer confidence, and personal income and spending.

Negative sentiment was recently generated by the release of a report from the National Association of Realtors showing an unexpected drop in pending home sales in the month of June.

NAR said its pending home sales index dropped by 1.1% to 102.7 in June after surging up by 6% to 103.8 in May. The decrease came as a surprise to economists, who had expected pending home sales to increase by another 0.5%.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Housing stocks have moved notably lower following the release of the data, dragging the Philadelphia Housing Sector Index down by 1.5%. The drop extends a recent pullback by the index, which has fallen to a two-month intraday low.

Electronic storage, oil service, and semiconductor stocks have also come under pressure, while most of the other major sectors have shown more modest moves to the downside.

Among individual stocks, shares of AcelRx Pharmaceuticals (ACRX) have fallen sharply in early trading after the FDA rejected the company's pain treatment Zalviso.

Shell egg producer Cal-Maine Foods (CALM) has also come under pressure despite reporting better than expected fourth quarter results.

On the other hand, shares of Family Dollar (FDO) are moving sharply higher after the discount retailer agreed to be acquired by rival Dollar Tree (DLTR) in a deal valued at approximately USD9.2 billion.

In overseas trading, stock markets across the Asia-Pacific region ended Monday's trading mixed. Japan'sNikki 225 Index rose by 0.5%, while Australia's All Ordinaries Index edged down by 0.1%. The markets in Singapore, Malaysia, and Indonesia were closed for public holidays.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has fallen by 0.7%, the UK'sFTSE 100 Index and the French CAC 40 Index are down by 0.2% and 0.1%, respectively.

In the bond market, treasuries are showing a lack of direction ahead of the key events later in the week. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 2.473%.

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Source: Alliance News

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