Stocks Extend Upward Move, Dow And S&P 500 Set Record Highs - U.S. Commentary

(RTTNews) - Extending the upward move seen over the three previous sessions, stocks moved mostly higher during trading on Monday. The gains on the day further offset the sharp pullback seen earlier this month, with the Dow and the S&P 500 reaching new record closing highs.

The major averages ended the session just off their best levels of the day. The Dow jumped 154.64 points or 0.9 percent to 17,959.44, the Nasdaq rose 16.04 points or 0.3 percent to 4,781.42 and the S&P 500 climbed 7.89 points or 0.4 percent to 2,078.54.

The strength on Wall Street partly reflected the recent upward momentum triggered by the Federal Reserve's monetary policy statement last Wednesday.

Stocks have moved solidly higher as traders focus on the central bank's pledge to remain "patient," lifting the major averages well off last Tuesday's one-month lows.

Optimism about the outlook for the U.S. economy may also have generated some buying interest ahead of the release of a slew of data on Tuesday.

Traders are likely to keep a close eye on reports on durable goods orders, personal income and spending and new home sales.

Meanwhile, traders largely shrugged off this morning's report from the National Association of Realtors showing that existing home sales pulled back by much more than expected in the month of November.

NAR said existing home sales tumbled 6.1 percent to a seasonally adjusted annual rate of 4.93 million in November after climbing 1.4 percent to 5.25 million in October. Economists had expected existing home sales to edge down to 5.20 million.

With the bigger than expected decrease, existing home sales fell to their lowest annual rate since hitting 4.91 million in May.

Among individual stocks, shares of Caesars Entertainment (CZR) moved sharply higher after the casino operator announced an agreement to merge with affiliate Caesars Acquisition in an all-stock transaction.

Biopharmaceutical company Achillion Pharmaceuticals (ACHN) also turned in a strong performance after announcing plans to test a combination of two of its experimental hepatitis C drugs after receiving positive interim results from two separate studies.

On the other hand, shares of Gilead Sciences (GILD) came under pressure after Express Scripts (ESRX) selected a hepatitis C drug from rival AbbVie (ABBV) as its exclusive option.

Sector News

Semiconductor stocks showed a strong move to the upside over the course of the trading day, driving the Philadelphia Semiconductor Index up by 1.5 percent. With the gain, the index continued to climb back toward the thirteen-year closing high set earlier this month.

KLA Tencor (KLAC), RF Micro Devices (RFMD), and Cree (CREE) turned in some of the semiconductor sector's best performances.

Considerable strength was also visible among railroad stocks, as reflected by the 1.5 percent gain posted by the Dow Jones Railroads Index. Providence & Worcester (PWX) helped lead the sector higher, jumping by 5.3 percent.

Commercial real estate, electronic storage, and networking stocks also saw significant strength on the day, moving higher along with most of the other major sectors.

On the other hand, gold stocks saw substantial weakness, dragging the NYSE Arca Gold Bugs Index down by 6.1 percent. The weakness in the sector came as gold for February delivery tumbled $16.20 to $1,179.80 an ounce.

Energy stocks also showed a notable move to the downside, as crude for February delivery fell $1.87 to $55.26 a barrel.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. China's Shanghai Composite Index rose by 0.6 percent, while Hong Kong's Hang Seng Index surged up by 1.3 percent. Japan's Nikkei 225 Index inched up by just 0.1 percent.

The major European markets also moved to the upside on the day. While the German DAX Index advanced by 0.8 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.5 percent and 0.3 percent, respectively.

In the bond market, treasuries showed a lack of direction for much of the session but moved modestly higher going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 2.162 percent.

Looking Ahead

While the slew of U.S. economic data is likely to attract attention on Tuesday, trading activity may be somewhat subdued ahead of the holidays.