Dow Closes Modestly Lower After Reaching Record High In Early Trading

(RTTNews) - Stocks moved to the upside early in the trading day on Monday but gave back ground over the course of the session. The major averages pulled back well off their early highs, with the Dow and the S&P 500 ending the day in negative territory.

After reaching a record intraday high in early trading, the Dow fell 97.31 points or 0.3 percent to 34,838.16. The S&P 500 also dipped 8.10 points or 0.2 percent to 4,387.16, while the Nasdaq inched up 8.39 points or 0.1 percent to 14,681.07.

The early strength on Wall Street partly reflected recent upward momentum, which has helped lift stocks to new record highs despite concerns about the spread of the delta variant of the coronavirus.

Traders remain optimistic about the outlook for the economy amid indications the Federal Reserve is not in a hurry to begin scaling back stimulus.

Positive sentiment may also have been generated after a bipartisan group of Senators unveiled a nearly $1 trillion infrastructure package.

Senate Majority Leader Chuck Schumer, D-N.Y., said he believes the Senate will vote to approve the massive bill in a matter of days.

However, buying interest waned over the course of the session after a report from the Institute for Supply Management showed an unexpected slowdown in the pace of growth in U.S. manufacturing activity in the month of July.

The ISM said its manufacturing PMI dipped to 59.5 in July from 60.6 in June. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to inch up to 60.9.

A separate report from the Commerce Department showed construction spending crept up by less than expected in the month of June.

Later this week, trading may be impacted by reaction to the Labor Department's closely watched report on the employment situation in the month of July.

Economists currently expect employment to spike by about 900,000 jobs in July after surging by 850,000 jobs in June. The unemployment rate is expected to dip to 5.7 percent from 5.9 percent.

Sector News

Chemical stocks showed a significant downturn over the course of the session, with the S&P Chemical Sector Index falling by 1.1 percent after reaching its best intraday level in well over a month.

Notable weakness also emerged among telecom stocks, as reflected by the 1 percent drop by the NYSE Arca North American Telecom Index. The index ended the day at a more than two-month closing low.

Airline, oil service and natural gas stocks also moved to the downside on the day, while some strength remained visible among utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Monday. Japan's Nikkei 225 Index spiked by 1.8 percent, while China's Shanghai Composite Index soared by 2 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index jumped by 1 percent, the U.K.'s FTSE 100 Index advanced by 0.7 percent and the German DAX Index inched up by 0.2 percent.

In the bond market, treasuries moved notably higher following the weaker than expected manufacturing data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.5 basis points to a nearly six-month closing low of 1.174 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the latest earnings news, with Alibaba (BABA), Clorox (CLX), DuPont (DD), Eli Lilly (LLY), Marriott (MAR), Ralph Lauren (RL) and Under Armour (UAA) among the companies due to report their quarterly results before the start of trading.

The Commerce Department is also scheduled to release its report on new orders for manufactured goods in the month of June.