U.S. Stocks Regain Ground After Initial Drop But Remain Firmly Negative

After moving sharply lower at the open, stocks have regained some ground over the course of morning trading on Monday. The major averages have climbed well off their worst levels of the day but remain firmly in negative territory.

Currently, the Dow and the S&P 500 are underperforming the tech-heavy Nasdaq. The Dow is down 364.42 points or 1.4 percent at 25,241.12 and the S&P 500 is down 33.86 points or 1.1 percent at 3,007.45, while the Nasdaq is down 59.22 points or 0.6 percent at 9,529.58.

The initial weakness on Wall Street came amid concerns about a second wave of coronavirus infections after Beijing recorded a spate of new Covid-19 cases in a major wholesale food market.

Data compiled by the New York Times also showed a recent increase in coronavirus cases in more than 20 states, including California, Florida, and Nevada.

Texas and North Carolina also reported a record number of coronavirus-related hospitalizations on Saturday, adding to worries that businesses reopening may drive a second wave.

New York Governor Andrew Cuomo said Sunday the state has received 25,000 complaints about businesses violating reopening guidelines and threatened to take liquor licenses away from bars and restaurants that break the rules.

However, the negative sentiment was partly offset by a report from the New York Federal Reserve showing manufacturing activity in New York steadied in June after seeing sharp contractions in April and May.

The New York Fed said its general business conditions index spiked to negative 0.2 in June from negative 48.5 in May. A negative reading indicates a contraction in regional manufacturing activity.

The jump by the index far exceeded the estimates of economists, who had expected the index to surge up to negative 27.5.

Traders may also be reluctant to make significant moves ahead of two days of congressional testimony from Federal Reserve Chair Jerome Powell.

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan’s Nikkei 225 Index plummeted by 3.5 percent, while Hong Kong’s Hang Seng Index tumbled by 2.2 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.2 percent, the French CAC 40 Index and the German DAX Index are down by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries have moved back to the upside following the pullback seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.7 basis points at 0.682 percent.

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