Stocks Extend Upward Trend But Close Well Off Highs - U.S. Commentary

(RTTNews) - After showing a strong move to the upside in morning trading on Monday, stocks gave back some ground in the afternoon but remained mostly positive. The gains on the day extended the upward trend seen earlier this month.

The major averages closed well off their highs for the session but still posted notable gains. The Dow climbed 103.84 points or 0.6 percent to 16,207.14, the Nasdaq advanced 29.56 points or 0.7 percent to 4,292.97 and the S&P 500 rose 11.36 points or 0.6 percent to 1,847.61.

The strength on Wall Street partly reflected the recent upward momentum for the markets, which has largely offset the sharp pullback seen in late January.

During the session, the S&P 500 set a new record intraday high before giving back ground, while the Nasdaq reached its best levels in almost fourteen years.

The Dow remains well below the record highs set late last year but has climbed well off the three-month closing low set on the first trading day of February.

Peter Boockvar, chief market analyst at the Lindsey Group, said the rally by stocks reflects enormous faith in the Federal Reserve.

"Faith that either [Fed Chair Janet] Yellen will blink in the face of the weak economic data and not follow thru with a continuation of tapering," Boockvar said.

He added, "Or the belief that the economy will soon rebound off the weather induced weakness and thus the Fed will be able to pull off a seamless end to QE without much economic impact."

Yellen is also scheduled to testify before the Senate Banking Committee on Thursday after her originally scheduled appearance before the committee was postponed due to a snowstorm in Washington.

Among individual stocks, shares of RF Micro Devices (RFMD) and TriQuint Semiconductor (TQNT) moved sharply higher after the chipmakers announced a definitive merger agreement.

Apparel retailer Jos. A. Bank (JOSB) also turned in a strong performance after Men's Wearhouse (MW) raised its cash tender offer for all outstanding shares of the company to $63.50 per share from $57.50 per share.

On the other hand, shares of HSBC (HSBC) moved to the downside after the financial giant reported a 9 percent increase in its full year pre-tax profits but still missed analyst estimates.

Sector News

Oil service stocks showed a substantial move to the upside on the day, driving the Philadelphia Oil Service Index up by 2.3 percent. With the gain, the index reached its best closing level in almost two months.

An increase by the price of crude oil contributed to the strength in the oil service sector, with crude for April delivery climbing $0.62 to $102.82 a barrel.

The increase by the price of crude oil also contributed to strength among oil producer stocks, resulting in a 1.3 percent gain by the NYSE Arca Oil Index.

Considerable strength also emerged among electronic storage stocks, as reflected by the 1.9 gain posted by the NYSE Arca Disk Drive Index. Datalink (DTLK) and Imation (IMN) posted strong gains.

Tobacco, financial, defense, and biotech stocks also saw notable strength, while steel stocks came under pressure over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index edged down by 0.2 percent, while Singapore's Straits Times Index crept up by 0.2 percent.

Meanwhile, the major European markets all moved to the upside over the course of the session. While the French CAC 40 Index advanced by 0.9 percent, the German DAX Index and the U.K.'s FTSE 100 Index rose by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries moved modestly lower amid the rally on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.6 basis points to 2.75 percent.

Looking Ahead

Following today's lack of major U.S. economic news, trading on Tuesday may be impacted by the release of reports on home prices and consumer confidence.

On the earnings front, Home Depot (HD), Macy's (M), Office Depot (ODP) and Toll Brothers (TOL) are among the companies due to report their quarterly results before the start of trading on Tuesday.