U.S. Stocks Regain Ground After Initial Pullback

(RTTNews) - After coming under pressure early in the session, stocks have regained some ground over the course of the trading day on Monday. The major averages have climbed well off their lows of the session but are currently all in negative territory.

The Dow is down 108.34 points or 0.2 percent at 49,395.73, the Nasdaq is down 5.27 points or less than a tenth of a percent at 23,666.07 and the S&P 500 is down 4.61 points or 0.1 percent at 6,961.67.

The initial pullback on Wall Street partly reflected concerns about the Federal Reserve's independence after Fed Chair Jerome Powell revealed that the U.S. central bank has been served subpoenas by the Department of Justice that threaten criminal charges.

"On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June," Powell said in a video statement released by the Fed on Sunday. "That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings."

U.S. media reports said Federal prosecutors have launched a criminal investigation of Powell over his June testimony to Congress regarding the $2.5 billion renovation project for three buildings, including the Eccles building that serves as the headquarters of the Fed.

Powell termed this action "unprecedented" and ascribed it to President Donald Trump's ongoing threats and pressure on the Fed to lower interest rates.

The top official expressed his deep respect for the rule of law and for accountability in our democracy, adding that the Fed chair was not above the law.

"Trump wants to lower borrowing costs, so consumers and businesses spend more money and propel the economy," said Russ Mould, investment director at AJ Bell.

He added, "However, what's worrying markets now over Trump's implied intervention is that the loss of Fed independence could lead to inflation getting out of control."

Selling pressure has waned over the course of the session, however, as traders remain optimistic about the outlook for interest rates.

While the Fed is widely expected to leave interest rates unchanged at its next meeting later this month, the central bank is still seen as likely to cut rates by at least another quarter point in the coming months.

Sector News

Despite the weakness in the broader markets, gold stocks have moved sharply higher along with he price of the precious metal, resulting in a 4.3 percent surge by the NYSE Arca Gold Bugs Index.

Significant strength is also visible among computer hardware stocks, as reflected by the 2.0 percent jump by the NYSE Arca Computer Hardware Index.

Utilities and steel stocks are also seeing some strength on the day, while banking, airline and oil service stocks have shown notable moves to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index shot up by 1.6 percent, while China's Shanghai Composite Index jumped by 1.1 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index is down by 0.2 percent, the U.K.'s FTSE 100 Index is up by 0.2 percent and the German DAX Index is up by 0.5 percent.

In the bond market, treasuries have regained some ground after an early slump but remain in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 4.187 percent.