US open: Stocks head south as Santa Claus rally comes to a halt

While futures were poiting to a flat open, stocks went red at the open as trade news remained firmly in focus Monday - the fourth day of the so-called Santa Claus rally period, which has typically given a boost to stocks.

As of 1525 GMT, the Dow Jones Industrial Average was down 0.68% at 28,450.05, while the S&P 500 was 0.54% lower at 3,222.39 and the Nasdaq Composite came out the gate 0.93% weaker at 8,922.48.

The Dow opened 195.21 points lower as shares headed south at the bell as investors claimed profits from some of the year's biggest gainers. Apple, Microsoft and Visa were all down roughly 1% in early trade.

Focus throughout the session looked likely to remain on improving US-China trade relations after the South China Morning Post revealed on Monday that Chinese Vice Premier Liu He, the nation's top trade negotiator, would be visiting Washington later in the week to sign the pair's "phase one" trade agreement.

Oanda analyst Edward Moya said: "Light trading is expected today as market participants leave hints that expectations remain in place for US stocks to continue march higher, while the dollar will soften in the New Year.

The S&P 500 index appears it will just fall short of a 30% gain this year, blowing away strategists' expectations of an 11% rise. Stocks seem poised to march higher in 2020 as the Fed has clearly signalled, they will not be tightening anytime soon, the US consumer continues to impress, and as fears of both a complete collapse with global trade talks and Brexit have abated."

Domestic concerns were also still simmering in the background, after Donald Trump, who was impeached by the House of Representatives earlier in the month, retweeted a post over the weekend that included the alleged name of the whistleblower whose complaint led to his impeachment.

On the data front, a slump in factory sector activity around the Chicago area eased more than expected at the end of the year, the results of a closely-followed survey revealed.

Market News International's Chicago Purchasing Managers' Index rose by 2.6 points from November's level to reach 48.9, beating analysts' forecasts for a print of 48.0.

However, for the fourth quarter as a whole, the PMI slipped 1.2 points versus the prior three-month stretch to reach 46.2 - its lowest mark since the second quarter of 2009.

Elsewhere, the National Association of Realtors said Monday that its pending home sales index, which measures the numbers of purchase contracts signed, rose 1.2% last month, to 108.5.

The trade association said that contract signings measured year over year are up a robust 7.4%

Still to come, Dallas Fed Manufacturing Activity data for December will follow at 1530 GMT.

In corporate news, no major earnings were scheduled for release on Monday.