Stocks Extend Last Week's Rally On Upbeat Earnings - U.S. Commentary

(RTTNews) - After showing a lack of direction throughout much of morning trading on Monday, stocks moved mostly higher over the course of the session. The gains on the day extended the strong upward move that was seen last week.

The major averages all closed in positive territory, with the Nasdaq and the S&P 500 at their best levels of the day. The Dow rose 40.71 points or 0.3 percent to 16,449.25, the Nasdaq advanced 26.03 points or 0.6 percent to 4,121.55 and the S&P 500 climbed 7.04 points or 0.4 percent to 1,871.89.

The strength that emerged on Wall Street partly reflected the upward momentum for the markets that was seen last week.

Stocks further offset the sharp pullback that was seen earlier this month, with the Dow and the S&P 500 climbing back toward their record highs.

A positive reaction to the latest earnings news also generated some buying interest, as the quarterly results have thus far been better than most had feared.

Shares of Advanced Micro Devices (AMD) surged up by 11.7 percent after the chipmaker reported better than expected first quarter results. The company also provided upbeat revenue guidance for the current quarter.

Halliburton (HAL) and Hasbro (HAS) also moved notably higher after reporting their quarterly results, while Kimberly-Clark (KMB) came under pressure on the day.

Positive sentiment may also have been generated by a report from the Conference Board showing a bigger than expected increase by its leading economic indicators index.

The Conference Board said its leading economic index rose by 0.8 percent in March after climbing by 0.5 percent in February. The advance exceeded economist estimates for a 0.7 percent increase.

"The LEI rose sharply again, the third consecutive monthly increase," said Ataman Ozyildirim, an economist at the Conference Board. "After a winter pause, the leading indicators are gaining momentum and economic growth is gaining traction."

Nonetheless, trading activity was somewhat subdued following the holiday weekend, with some traders looking ahead to the release of more closely watched earnings and economic news later in the week.

Sector News

Extending a recent upward trend, pharmaceutical stocks showed a strong move to the upside on the day. Reflecting the strength in the sector, the NYSE Arca Pharmaceutical Index surged up by 1.7 percent.

AstraZeneca (AZN) helped to lead the pharmaceutical sector higher, with the drug maker jumping by 8.8 percent amid reports that Pfizer (PFE) had been in negotiations to acquire the company.

Significant strength also emerged among biotechnology stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Biotechnology Index. With the gain, the index climbed further off the three-month closing low that it set last Monday.

Computer hardware, oil service, and semiconductor stocks also saw notable strength on the day, while most of the other major sectors ended the day showing only modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, with several major markets closed for public holidays. Japan's Nikkei 225 Index closed just below the unchanged line, while China's Shanghai Composite Index slumped by 1.5 percent.

Meanwhile, the major European markets all remained closed on the day to celebrate "Easter Monday" holidays.

In the bond market, treasuries ended the day flat after failing to sustain an early upward move. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 2.721 percent after hitting a low of 2.688 percent.

Looking Ahead

Earnings news is likely to be in focus during trading on Tuesday, with McDonald's (MCD) Travelers (TRV) United Technologies (UTX), Xerox (XRX), and Lexmark (LXK) among the companies due to report their quarterly results before the start of trading.

Trading could also be impacted by a report from the National Association of Realtor's report on existing home sales in the month of March.