U.S. Stocks Regain Ground After Seeing Initial Weakness

After coming under pressure early in the session, stocks have regained some ground over the course of morning trading on Monday. The major averages have bounced well off their lows of the session, with the tech-heavy Nasdaq climbing into positive territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 28.53 points or 0.3 percent at 8,633.48, the Dow is down 193.87 points or 0.8 percent at 23,529.82 and the S&P 500 is down 11.00 points or 0.4 percent at 2,819.71.

The initial weakness on Wall Street came amid concerns about rising tensions between the U.S. and China after Secretary of State Mike Pompeo claimed on Sunday there was “a significant amount of evidence” that the new coronavirus originated from a laboratory in China.

China’s Global Times said in an editorial that Pompeo was “bluffing” and called on the United States to present its evidence.

The comments from Pompeo come after top White House economic advisor Larry Kudlow told CNBC that China would be “held accountable” for the coronavirus.

President Donald Trump has previously indicated he is considering imposing tariffs on China over its handling of the outbreak.

Airline stocks helped lead the markets lower after Berkshire Hathaway Chairman and billionaire investor Warren Buffett said the conglomerate has sold its entire equity position in the U.S. airline industry.

“The world has changed for the airlines,” Buffett said during Berkshire’s annual shareholder meeting Saturday, citing the potential long-term impact of the coronavirus pandemic.

According to CNBC, Berkshire’s airline holdings were worth more than $4 billion dollars as of December and included positions in United (UAL), American (AAL), Southwest (LUV) and Delta Airlines (DAL).

Selling pressure has waned since the open, however, with the rebound by the Nasdaq coming after disappointing earnings news from Amazon and Apple weighed on the tech-heavy index last Friday.

Reflecting the weakness among airline stocks, the Dow Jones Transportation Average has tumbled by 2.8 percent, continuing to give back ground after ending last Wednesday’s trading at its best closing level in well over a month.

Considerable weakness is also visible among banking and commercial real estate stocks, with the KBW Bank Index and the Dow Jones U.S. Real Estate Index slumped by 2.2 percent and 1.9 percent, respectively.

On the other hand, oil stocks have shown a strong move to the upside on the day, driving the NYSE Arca Oil Index up by 2.1 percent. The strength in the sector comes as crude oil for June delivery is rising $0.28 to $20.06 a barrel.

Notable strength has also emerged among software stocks, as reflected by the 1.2 percent gain being posted by the Dow Jones U.S. Software Index.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with markets in Japan and mainland China closed for holidays. Hong Kong’s Hang Seng Index plunged by 4.2 percent, while Australia’s S&P/ASX 200 Index jumped by 1.4 percent.

Meanwhile, European stocks have moved sharply lower on the day. The French CAC 40 Index and the German DAX Index have plunged by 3.9 percent and 3.3 percent, respectively, although the U.K.’s FTSE 100 Index has bucked the downtrend and inched up by 0.1 percent.

In the bond market, treasuries have turned lower over the course of the session after seeing initial strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by nearly a basis point at 0.651 percent.

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