Stocks Close Mostly Higher After Early Upward Move - U.S. Commentary

(RTTNews) - After moving notably higher in early trading on Monday, stocks continued to perform well throughout much of the session. While buying interest was somewhat subdued, the major averages added to the strong gains posted last week.

The major averages all ended the day in positive territory, although the Nasdaq posted a relatively modest gain. The Nasdaq edged up 5.45 points or 0.2 percent to 3,484.83, while the Dow rose 88.85 points or 0.6 percent to 15,224.69 and the S&P 500 climbed 8.57 points or 0.5 percent to 1,640.46.

The strength on Wall Street came as traders continued to react positively to last Friday's monthly jobs report, which showed stronger than expected job growth in the month of July.

The increased optimism about the economic outlook seemed to overshadow concerns that the data may lead the Federal Reserve to begin scaling back its stimulus program.

Nonetheless, trading activity was relatively subdued, as some traders remained away from their desks following last week's Independence Day holiday.

Uncertainty about the upcoming earnings season also kept some traders on the sidelines, with Alcoa (AA) releasing its second quarter results after the close of trading.

The release of quarterly results from Alcoa is seen as the unofficial start of earnings season, as the aluminum giant is traditionally the first Dow component to report its results.

Peter Boockvar of Morgan Stanley said, "With Q2 corporate earnings about to begin, S&P 500 earnings are expected to be up just 1.8% year-over-year and down by 1% ex financials."

"Revenue growth is expected to be up a modest 1.3% and 1.2% ex financials, which follows revenue growth in Q1 of just 0.6% and 0.3% ex financials," he added.

Late in the day, the Federal Reserve released a report showing a bigger than expected increase in consumer credit in the month of May.

Sector News

Many of the major sectors ended the day showing only modest moves, although considerable strength was visible among utilities stocks. Reflecting the strength in the utilities sector, the Dow Jones Utilities Average rose by 1.3 percent.

Exelon (EXC) and NiSource (NI) turned in two of the utilities sector's best performances, climbing by 2.4 percent and 2.2 percent, respectively.

Significant strength was also visible among retail stocks, as reflected by the 1.2 percent gain posted by the Dow Jones Retail Index. With the gain, the index reached a record closing high.

Meanwhile, semiconductor stocks came under pressure on the day, dragging the Philadelphia Semiconductor Index down by 2 percent. Intel (INTC) helped lead the sector lower following some disappointing analyst comments.

Gold stocks also showed a notable move to the downside, resulting in a 1.7 percent drop by the NYSE Arca Gold Bugs Index. The weakness among gold stocks came despite an increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index fell by 1.4 percent, while Hong Kong's Hang Seng Index ended the day down by 1.3 percent.

Meanwhile, the major European showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 1.2 percent, the French CAC 40 Index and the German DAX Index surged up by 1.9 percent and 2.1 percent, respectively.

In the bond market, treasuries regained some ground after seeing substantial weakness last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 7 basis points to 2.645 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction Alcoa's quarterly results, although activity may be somewhat subdued amid another quiet day on the economic front.