Stocks Close Mostly Higher Amid Increase In Oil Prices - U.S. Commentary

(RTTNews) - Following the mixed performance seen last week, stocks moved mostly higher during trading on Monday. With the upward move on the day, the tech-heavy Nasdaq and the S&P 500 once again climbed to new record closing highs.

The major averages ended the day firmly in positive territory. The Dow rose 85.33 points or 0.4 percent to 20,981.94, the Nasdaq advanced 28.44 points or 0.5 percent to 6,149.67 and the S&P 500 climbed 11.42 points or 0.5 percent to 2,402.32.

A significant increase by the price of crude oil generated some buying interest, with crude for June delivery surging up $1.01 to $48.85 a barrel.

The jump in oil prices came after the Saudi Arabian and Russian energy ministers indicated an agreement to freeze oil output would be extended until March of 2018.

Cybersecurity companies such as FireEye (FEYE) and Symantec (SYMC) also moved substantially higher on the heels of a widespread ransomware attack.

On the U.S. economic front, the National Association of Home Builders released a report showing homebuilder confidence has unexpectedly improved in the month of May.

The report said the NAHB/Wells Fargo Housing Market Index rose to 70 in May after pulling back to 68 in April. Economists had expected the index to come in unchanged compared to the previous month.

Meanwhile, a separate report from the New York Federal Reserve unexpectedly showed a contraction in regional manufacturing activity in the month of May.

The New York Fed said its general business conditions index fell to a negative 1.0 in May from a positive 5.2 in April, with a negative reading indicating a contraction in regional manufacturing activity.

The index's pullback into negative territory came as a surprise to economists, who had expected the index to rise to a positive 7.0.

Among individual stocks, shares of Patheon (PTHN) moved sharply higher after the Dutch drug ingredient maker agreed to be acquired by Thermo Fisher Scientific (TMO) for $35 per share in cash.

Healthcare giant Johnson & Johnson (JNJ) also posted a strong gain after JPMorgan upgraded its rating on the company's stock to Overweight from Neutral.

On the other hand, shares of Ionis Pharmaceuticals (IONS) came under pressure amid concerns about the side effects of its treatment for familial amyloid polyneuropathy.

Sector News

Steel stocks showed a strong move to the upside on the day, driving the NYSE Arca Steel Index up by 2.3 percent. The index rebounded after ending last Friday's trading at lowest closing level in six months.

Ryerson (RYI), Olympic Steel (ZEUS), and Cliffs Natural Resources (CLF) turned in some of the steel sector's best performances.

Considerable strength was also visible among oil service stocks, as reflected by the 1.9 percent jump by the Philadelphia Oil Service Index. The strength in the sector came amid the sharp increase by the price of crude oil.

Housing stocks also saw significant strength on the heels of the upbeat homebuilder confidence data, with the Philadelphia Housing Sector Index climbing by 1.5 percent.

Airline, semiconductor, and brokerage stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday. China's Shanghai Composite Index crept up by 0.2 percent, and Hong Kong's Hang Seng Index advanced by 0.9 percent. However, Japan's Nikkei 225 Index bucked the uptrend and dipped by 0.1 percent.

The major European markets also moved modestly higher on the day. While the French CAC 40 Index edged up by 0.2 percent, the German DAX Index and the U.K.'s FTSE 100 Index both rose by 0.3 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.338 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to economic reports on new residential construction and industrial production in the month of April.

Housing starts are expected to climb to an annual rate of 1.260 million, while industrial production is expected to rise by 0.3 percent.

On the earnings front, Home Depot (HD) and Staples (SPLS) are due to report their quarterly results before the start of trading on Tuesday.