Stocks See Modest Strength, S&P 500 Reaches New Record High - U.S. Commentary

(RTTNews) - Stocks moved modestly higher during trading on Monday, adding to the strong gains posted last Friday. While the markets continued to recover from the pullback seen early last week, buying interest remained relatively subdued.

The major averages closed only slightly higher, although the S&P 500 still reached a new record closing high. The S&P 500 rose 3.28 points or 0.2 percent to 1,808.37, while the Dow inched up 5.33 points or less than a tenth of a percent to 16,025.35 and the Nasdaq edged up 6.23 points or 0.2 percent to 4,068.75.

The modest strength on Wall Street was partly due to the release of a report showing that the Chinese trade surplus rose to its highest level in nearly five years in the month of November.

The report from China's General Administration of Customs said the trade surplus widened to $33.8 billion in November from $31.1 billion in October.

Chinese export growth accelerated to 12.7 percent year-over-year from 5.6 percent in October, while imports rose 5.3 percent, slower than the 7.6 percent growth seen in the previous month.

A separate report from China's National Bureau of Statistics showed that Chinese consumer prices rose less than expected in November amid a slowdown in food price inflation.

Nonetheless, traders seemed somewhat reluctant to make any significant moves amid a quiet day in terms of major U.S. economic news.

Following the slew of key economic data released last week, the economic calendar is relatively light throughout this week.

While reports on retail sales, jobless claims, and producer prices are likely to attract some attention, the data is not expected to shed much light on the outlook for the Federal Reserve's stimulus program.

Comments from St. Louis Fed President James Bullard also helped limit the upside for the markets, as he said the central bank may begin tapering its asset purchase plan next week in response to last Friday's better-than-expected jobs data.

"Based on labor market data alone, the probability of a reduction in the pace of asset purchases has increased," Bullard told the CFA Society of St. Louis.

Sector News

Gold stocks turned in some of the market's best performances on the day, regaining ground after falling sharply over the past few weeks. The NYSE Arca Gold Bugs Index advanced by 2.2 percent, bouncing off its worst closing level in five years.

The strength among gold stocks came amid an increase by the price of the precious metal, with gold for February delivery climbing $5.20 to $1,234.20 an ounce.

Significant strength was also visible among airline stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Airline Index. American Airlines Group (AAL) moved sharply higher as it began trading following the merger between American and US Airways.

Steel stocks also turned in a strong performance, benefiting from the upbeat Chinese data. Housing stocks also saw considerable strength, while most of the other major sectors showed more modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index surged up by 2.3 percent, while Hong Kong's Hang Seng Index ended the day up by 0.3 percent.

The major European markets also moved to the upside on the day. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both inched up by 0.1 percent.

In the bond market, treasuries regained some ground after showing a notable move to the downside over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 2.857 percent.

Looking Ahead

Trading activity on Tuesday is likely to remain relatively subdued amid another quiet day on the U.S. economic front.