U.S. Stocks Little Changed After Recovering From Early Weakness

After an early move to the downside, stocks have fluctuated over the course of the trading session on Monday. The major averages have climbed well off their early lows and briefly all reached positive territory before giving back ground.

Currently, the Dow is off its high of the session but still up 68.87 points or 0.2 percent at 34,351.97. Meanwhile, the Nasdaq is down 19.90 points or 0.1 percent at 13,778.20 and the S&P 500 is down 0.94 points or less than a tenth of a percent at 4,414.30.

The early weakness on Wall Street came as some traders looked to cash in on last Friday’s rally, which lifted the tech-heavy Nasdaq to a nearly two-month closing high.

The Dow and the S&P 500 also surged to their best closing levels in well over a month, more than offsetting the pullback seen on Thursday.

Negative sentiment was also generated in reaction to news credit rating agency Moody’s has lowered its outlook for the U.S.’ credit rating to negative from stable.

Moody’s reaffirmed the U.S. credit rating at Aaa but said it “expects that the U.S.’ fiscal deficits will remain very large, significantly weakening debt affordability.”

The selling pressure was partly offset by a report from the New York Federal Reserve showing a modest decrease in consumer inflation expectations.

The New York Fed said inflation expectations declined at the one-year and five-year ahead horizons in October, falling to 3.6 percent from 3.7 percent and to 2.7 percent from 2.8 percent, respectively.

Overall trading activity remains somewhat subdued, however, as traders look ahead to the release of key inflation data in the coming days.

The inflation data could have a significant impact on the outlook for interest rates, with traders recently expressing optimism the Federal Reserve is done raising rates.

Sector News

Utilities stocks continue to see considerable weakness in afternoon trading, with the Dow Jones Utility Average falling by 1.3 percent.

Notable weakness also remains visible among semiconductor stocks, as reflected by the 1.1 percent loss being posted by the Philadelphia Semiconductor Index.

On the other hand, tobacco stocks have shown a substantial move to the upside, driving the NYSE Arca Tobacco Index up by 2.4 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while Australia’s S&P/ASX 200 Index fell by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the German DAX Index and the French CAC 40 Index climbed by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries have climbed well off their worst levels of the session but remain modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 4.644 percent.

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