U.S. Stocks Seeing Modest Weakness Amid Ongoing Interest Rate Worries

Stocks are seeing modest weakness in morning trading on Monday, adding to the steep losses posted last week. The major averages have all moved to the downside, with the Nasdaq and the S&P 500 falling to their lowest intraday levels in over three months.

In recent trading, the Dow has fallen to a new low for the session. The blue chip index is currently down 148.62 points or 0.4 percent at 33,815.22, while the Nasdaq is down 33.08 points or 0.3 percent at 13,178.73 and the S&P 500 is down 10.07 points or 0.2 percent at 4,309.99.

Concerns about the outlook for interest rates continue to weigh on Wall Street following last week’s Federal Reserve meeting.

The Fed left interest rates unchanged as widely expected but forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.

CME Group’s Fed Watch Tool is currently indicating an 81.6 percent chance the Fed will leave interest rates unchanged at its next meeting in late October/early November and just an 18.4 percent chance of a quarter point rate hike.

Meanwhile, the Fed Watch Tool is indicating a 62.5 percent chance the Fed will leave rates unchanged at its December meeting and a 33.1 percent chance the central bank will raise rates by a quarter point.

The interest rate worries have contributed to a surge by treasury yields, with the yield on the benchmark ten-year note spiking to its highest levels since October 2007.

Later in the week, the Commerce Department is due to release its report on personal income and spending in the month of August, which includes readings on inflation said to be preferred by the Fed.

Reports on consumer confidence, new home sales and durable goods orders may also attract attention in the coming days.

Sector News

Airline stocks are turning in some of the worst performances on the day, dragging the NYSE Arca Airline Index down by 1.7 percent to a six-month intraday low.

Considerable weakness is also visible among gold stocks, as reflected by the 1.7 percent loss being posted by the NYSE Arca Gold Bugs Index.

The weakness in the gold sector comes amid a modest decrease by the price of the precious metal, with gold for December delivery slipping $4.10 to $1,941.50 an ounce.

Telecom, steel and utilities stocks are also seeing notable weakness on the day, while energy stocks are seeing some strength amid an uptick by the price of crude oil.

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 advanced by 0.9 percent, while Hong Kong’s Hang Seng Index dove by 1.8 percent.

Meanwhile, the major European markets have all shown significant moves to the downside on the day. While the German DAX Index has slumped by 1.2 percent, the U.K.’s FTSE 100 Index is down by 1.1 percent and the French CAC 40 Index is down by 1.0 percent.

In the bond market, treasuries have pulled back sharply following the rebound seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 8.9 basis points at 4.527 percent.

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