U.S. Stocks Extending Last Friday’s Pullback Amid Interest Rate Uncertainty

Stocks have moved mostly lower during trading on Monday, extending the notable downturn seen over the course of last Friday’s session. The major averages have all moved to the downside, with the Nasdaq and S&P 500 pulling back further off last week’s record highs.

Currently, the major averages are off their lows of the session but still in the red. The Dow is down 212.11 points or 0.6 percent at 38,510.58, the Nasdaq is down 41.02 points or 0.3 percent at 16,044.09 and the S&P 500 is down 21.68 points or 0.4 percent at 5,102.01.

The continued weakness on Wall Street comes amid uncertainty about the outlook for interest rates ahead of the release of key inflation data in the coming days.

The Labor Department is scheduled to release its closely watched report on consumer price inflation in the month of February on Tuesday.

Economists currently expect consumer prices to climb by 0.4 percent in February after rising by 0.3 percent in January.

Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in February following a 0.4 percent increase in January.

Meanwhile, the annual rate of consumer price growth is expected to come in unchanged from the previous month at 3.1 percent, while annual core consumer price growth is expected to slow to 3.7 percent from 3.9 percent.

The consumer price inflation data could have a significant impact on the outlook for interest rates, with Federal Reserve officials saying they need “greater confidence” inflation is slowing before they consider cutting rates.

While the Fed is widely expected to leave rates unchanged at its monetary policy meeting next week, the data could impact expectations regarding when the central bank will eventually lower rates.

On Thursday, the Labor Department is due to release a separate report on producer price inflation in the month of February.

Producer prices are expected to rise by 0.3 percent in February, matching the increase seen in January, while the annual rate of producer price growth is expected to accelerate to 1.2 percent from 0 .9 percent.

Reports on retail sales, industrial production and consumer sentiment are also likely to attract attention in the coming days.

Sector News

Steel stocks have shown a substantial move to the downside on the day, resulting in a 2.0 percent slump by the NYSE Arca Steel Index.

Significant weakness is also visible among semiconductor stocks, as reflected by the 1.4 percent loss being posted by the Philadelphia Semiconductor Index.

Computer hardware stocks are also seeing considerable weakness, dragging the NYSE Arca Computer Hardware Index down by 1.3 percent.

Airline, pharmaceutical and retail stocks have also shown notable moves to the downside, while gold stocks are bucking the downward trend amid a modest increase by the price of the precious metal.

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 plunged by 2.2 percent, while Hong Kong’s Hang Seng Index jumped by 1.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has slid by 0.6 percent, the French CAC 40 Index is down by 0.4 percent and the U.K.’s FTSE 100 Index is down by 0.3 percent.

In the bond market, treasuries continue to show a lack of direction after ending last Friday’s trading roughly flat. The yield on the benchmark ten-year note, which moves opposite of its price, is currently up by less than a basis point at 4.096 percent.