Stocks have moved mostly lower in morning trading on Monday, adding to the modest losses posted in the previous session. With the drop on the day, the major averages are pulling back further off the record closing highs set last Wednesday.
The major averages have climbed off their worst levels in recent trading but remain stuck in the red. The Dow is down 108.63 points or 0.4 percent at 26,813.49, the Nasdaq is down 64.25 points or 0.8 percent at 8,097.54 and the S&P 500 is down 13.92 points or 0.5 percent at 2,976.49.
Selling pressure has re-emerged amid waning optimism about a near-term interest rate cut following last Friday's much better than expected jobs data.
CME Group's FedWatch Tool still points to a rate cut at the next Federal Reserve meeting later this month, although expectations have dramatically shifted toward a 25 basis point cut rather than a 50 basis point cut.
The shift came after the Labor Department's closely watched report showed employment jumped by 224,000 jobs in June compared to expectations for an increase of 160,000 jobs.
In light of the focus on the outlook for rates, trading activity is somewhat subdued ahead of Fed Chairman Jerome Powell's congressional testimony later this week.
Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.
Wednesday will also see the release of the minutes of the Fed's last monetary policy meeting, which may shed additional light on the central bank's decision to make notable changes to its accompanying statement.
Computer hardware stocks have shown a significant move to the downside in morning trading, dragging the NYSE Arca Computer Hardware Index down by 1.1 percent.
NetApp (NTAP) is leading the sector lower after Citigroup downgraded its rating on the data storage provider to Sell from Neutral.
Tech giant Apple (AAPL) is also posting a notable loss after Rosenblatt Securities downgraded its rating on the company's stock to Sell from Neutral.
Networking and biotechnology stocks are also seeing considerable weakness, contributing to the drop by the tech-heavy Nasdaq.
On the other hand, oil service stocks have shown a strong upward move, driving the Philadelphia Oil Service Index up by 1.2 percent.
The strength in the oil service sector comes amid an increase by the price of crude oil, with crude for August delivery climbing $0.90 to $58.41 a barrel.
In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan's Nikkei 225 Index slumped by 1 percent, while China's Shanghai Composite Index plunged by 2.6 percent.
Meanwhile, the major European markets have turned mixed on the day. While the U.K.'s FTSE 100 Index has inched up by 0.1 percent, the French CAC 40 Index is down by 0.2 percent and the German DAX Index is down by 0.3 percent.
In the bond market, treasuries are seeing modest strength following the sharp pullback seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.8 basis points at 2.020 percent.
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