The U.S. stock market traded lower on Monday morning as investors took profits following the World Bank's move to cut its growth forecasts for East Asia. Earnings season is approaching and concerns over Chinese growth are causing investors to show caution to start the week.
The tech heavy PowerShares QQQ Trust ETF (NASDAQ: QQQ), which tracks the performance of the Nasdaq 100, had shed 0.90 percent to $68.38. The heavily traded ETF has notched a gain of more than 22 percent in 2012 as risk appetite continues to be strong in U.S. equities approaching the upcoming Presidential election.
The concerns over Asian growth can be seen most notably in copper prices on Monday, as futures were trading down around 1.4 percent to $3.7245. Silver futures were last down 1.63 percent to $34.01. Gold had lost around 0.28 percent to $1,775.80. Both gold and silver traded down sharply on Sunday evening, before bouncing back overnight. The weakness in risk assets can also be seen in crude oil, which was trading down 0.80 percent to just above $89.00.
As the stock market falls, money has been moving into U.S. Treasury bonds, with the iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) as it climbed about 0.50 percent to near $121.85. Caution is also lending some support to the U.S. dollar, as dollar Index futures have registered a gain of 0.27 percent. The closely watched EUR/USD pair was last trading down 0.52 percent to $1.2964. Traders will want to watch this currency pair closely this week, as a break of $1.30 to the upside should be supportive of risk assets.
Notable stocks on Monday include Netflix (NASDAQ: NFLX) and CarMax (NYSE: KMX). CarMax shares are around 9 percent higher to $31.90 after ITG Investment Research said that revenue growth is accelerating at the used-car superstore. Netflix has climbed better than 10 percent to $73.28 after the stock was upgraded to Overweight at Morgan Stanley (NYSE: MS).
The analyst Scott Devitt said that the company is not under direct pressure from Amazon.com's (NASDAQ: AMZN) Prime streaming video service. “Previously, we were very concerned about Amazon.com's Prime Instant Video offering,” Devitt said. “Prime Instant Video is all about value investing –- finding good content at low prices and offering more incentive for consumers to buy a Kindle Fire.”
He added that Netflix's domestic business alone is "enough to support the stock at current levels." The rally in NFLX on Monday adds to previous gains in the stock which was one of the biggest market winners last week. Over the last 5 days, shares have risen around 31 percent.