U.S. Stocks Move Sharply Lower As Early Buying Interest Evaporates

Stocks moved mostly higher in early trading on Monday but have come under considerable selling pressure over the course of the session. The major averages have pulled back well off their early highs and into negative territory, with the tech-heavy Nasdaq leading the pullback.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Nasdaq is down 240.71 points or 1.5 percent at 15,934.39, the S&P 500 is down 49.55 points or 1.0 percent at 5,073.86 and the Dow is down 190.79 points or 0.5 percent at 37,792.45.

The initial strength on Wall Street partly reflected a positive reaction to earnings news from Goldman Sachs (GS), as the investment banking company reported first quarter earnings that far exceeded analyst estimates on better than expected revenues.

Traders also initially reacted positively to a Commerce Department report showing much stronger than expected U.S. retail sales growth in the month of March.

The Commerce Department said retail sales climbed by 0.7 percent in March after advancing by an upwardly revised 0.9 percent in February.

Economists had expected retail sales to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a pullback by sales by motor vehicle and parts dealers, retail sales jumped by 1.1 percent in March after climbing by 0.6 percent in February. Ex-auto sales were expected to rise by 0.4 percent.

Buying interest shortly after the start of trading, however, as the retail sales data has triggered another spike by treasury yields.

The yield on the benchmark ten-year note has surged to its highest levels in five months, as the data has led to renewed concerns about the outlook for interest rates.

“The robust gain in retail sales in March followed by upward revisions in the prior two months shows the consumer continues to power the overall economy forward,” said Nationwide Chief Economist Kathy Bostjancic.

However, she added, “The lack of moderation in consumer spending and inflation will undermine Fed officials’ confidence that inflation is on a sustainable course back to 2% and likely delays rate cuts to September at the earliest and could push off rate reductions to next year.”

Sector News

Software stocks have moved sharply lower over the course of the session, dragging the Dow Jones U.S. Software Index down by 2.0 percent to its lowest intraday level in over a month.

Considerable weakness has also emerged among interest rate-sensitive commercial real estate stocks, with the Dow Jones U.S. Real Estate Index falling by 1.5 percent.

Gold stocks are also seeing considerable weakness despite an increase by the price of the precious metal, as reflected by the 1.5 percent loss being posted by the NYSE Arca Gold Bugs Index.

Semiconductor, housing and computer hardware stocks have also come under pressure over the course of the session, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index both slid by 0.7 percent, although China’s Shanghai Composite Index bucked the downtrend and jumped by 1.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index fell by 0.4 percent, the French CAC 40 Index rose by 0.4 percent and the German DAX Index climbed by 0.5 percent.

In the bond market, treasuries have moved sharply lower in reaction to the retail sales data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 13.112.5 basis points at 4.624 percent.