Stocks Finish Choppy Trading Day Nearly Flat - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout the trading session on Monday, as traders seemed reluctant to make any significant moves. The choppy trading came on the heels of the strong performance that was seen last week.

The major averages ended the day mixed, although they were all nearly flat. While the Nasdaq inched up 0.64 points or less than 0.1 percent to 4,368.68, the Dow slipped 9.82 points or 0.1 percent to 16,937.26 and the S&P 500 edged down 0.26 points or less than 0.1 percent to 1,962.61.

The lackluster performance on Wall Street partly reflected uncertainty about the near-term outlook for the markets after last week's gains lifted the Dow and the S&P 500 to record closing highs.

While recent reports have pointed to a rebound by the economy following the winter slump, some investors remain concerned that the markets have become overbought.

A mixed batch of economic data from overseas may also have contributed to the choppy trading, as separate reports showed growth in Chinese manufacturing activity for the first time in six months but an unexpected slowdown in the pace of growth in Eurozone business activity.

Meanwhile, traders largely shrugged off the release of a report from the National Association of Realtors showing a bigger than expected increase in U.S. existing home sales in the month of May.

NAR said existing home sales jumped 4.9 percent to a seasonally adjusted annual rate of 4.89 million in May from an upwardly revised 4.66 million in April. Economists had expected existing home sales to climb to an annual rate of 4.75 million.

With the bigger than expected increase, existing home sales rose to their highest annual rate since last October, although they remain down by 5.0 percent compared to the same month a year ago.

Several other key reports are scheduled to be released later in the week, including data on new home sales, durable goods orders and personal income and spending.

The personal income and spending report includes a reading on inflation that is favored by the Federal Reserve and is likely to be in focus in light of recent reports showing notable price growth.

In her post-meeting press conference last Wednesday, Fed Chair Janet Yellen acknowledged that recent inflation data has been on "the high side" but also described the data as "noisy."

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Gold stocks turned in a strong performance, however, with the NYSE Arca Gold Bugs Index advancing by 1.6 percent. With the gain, the index reached its best closing level in three months.

The strength in the gold sector came amid a modest increase by the price of the precious metal, as gold for August delivery rose $1.80 to $1,318.40 an ounce.

Steel and internet stocks also moved to the upside on the day, although buying interest remained relatively subdued.

Meanwhile, substantial weakness was visible among tobacco stocks, as reflected by the 1.9 percent loss posted by the NYSE Arca Tobacco Index. Alliance One (AOI) helped lead the sector lower, falling by 3.9 percent.

Airline, trucking, and biotech stocks also saw some weakness, offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region once again turned in a mixed performance on Monday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng tumbled by 1.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 0.4 percent, the French CAC 40 Index and the German DAX Index fell by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries ended the day nearly flat following a late-day pullback. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.623 percent.

Looking Ahead

Trading on Tuesday may be impacted by the day's batch of economic data, including reports on home prices, new home sales, and consumer confidence.