Stocks Regain Ground Following Last Week's Sell-Off - U.S. Commentary

(RTTNews) - After showing a lack of direction for much of morning trading on Monday, stocks showed a notable move to the upside over the course of the afternoon. The strength that emerged helped the markets to regain some ground following last week's sell-off.

The major averages pulled back off their highs going into the close but remained firmly positive. The Dow rose 75.91 points or 0.5 percent to 16,569.28, the Nasdaq advanced 31.25 points or 0.7 percent to 4,383.89 and the S&P 500 climbed 13.84 points or 0.7 percent to 1,938.99.

Bargain hunting contributed to the strength that emerged on Wall Street, with the Dow and the S&P 500 rebounding after ending last Friday's trading at two-month closing lows.

The markets also benefited from news that Portugal's central bank announced a plan to rescue troubled lender Banco Espirito Santo to protect taxpayers and senior creditors.

In a 4.9 billion euro bailout that will leave junior bondholders with losses, the lender will be split into a "good bank" with healthy assets and a "bad bank" with riskier assets.

Better than expected quarterly results from Warren Buffett's Berkshire Hathaway (BRK.B, BRK.A) also generated some positive sentiment, with the company's Class B shares advancing by 3.1 percent.

Nonetheless, trading activity on the day remained somewhat subdued amid the absence of any major U.S. economic data.

Following the slew of economic data that was released last week, the economic calendar for the unfolding week is relatively quiet.

Later in the week, trading may be impacted by the release of reports on service sector activity, international trade, and labor productivity and costs.

Among individual stocks, shares of Amgen (AMGN) saw significant strength after the biotechnology company said its blood cancer drug Kyprolis met its primary endpoint in an interim analysis.

Auto retailer AutoNation (AN) also moved to the upside after reporting an 8 percent year-over-year jump in new car sales in the month of July.

Meanwhile, shares or Michael Kors (KORS) fell sharply even though the luxury goods maker reported fiscal first quarter results that came in above analyst estimates.

Sector News

After showing a notable move to the downside over the past few sessions, energy stocks turned in a particularly strong performance on the day. The NYSE Arca Oil & Gas Index surged up by 1.8 percent, bouncing off a nearly two-month closing low.

The rebound by energy stocks came amid an increase by the price of crude oil, with crude for September delivery climbing $0.41 to $98.29 a barrel.

Significant strength was also visible among internet stocks, as reflected by the 1.6 percent gain posted by the Dow Jones Internet Index. Priceline (PCLN) helped lead the sector higher, jumping 4.3 percent to its best closing level in over four months.

Computer hardware, software, steel and chemical stocks also saw considerable strength on the day, while gold stocks bucked the uptrend amid a drop by the price of the precious metal.

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 dipped by 0.3 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index advanced by 0.3 percent, the U.K.'s FTSE 100 Index closed just below the unchanged line and the German DAX Index fell by 0.6 percent.

In the bond market, treasuries pulled back off their best level of the day but managed to close modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 2.491 percent.

Looking Ahead

Economic data may attract some attention on Tuesday, with traders likely to keep an eye on a pair of reports on service sector activity and factory orders.

On the earnings front, Office Depot (ODP), Monster Worldwide (MWW), CVS Caremark (CVS), and Archer Daniels Midland (ADM) are among the companies due to report their quarterly results before the start of trading on Tuesday.