U.S. Stocks Show Significant Rebound Following Last Week's Sell-Off

(RTTNews) - Stocks moved sharply higher over the course of the trading session on Monday, partly offsetting the steep losses posted last week. The major averages all showed significant moves to the upside following the mixed performance seen last Friday.

The major averages pulled back off their highs going into the close but held on to strong gains. The Dow spiked 511.37 points or 1.6 percent to 32,928.96, the Nasdaq jumped 146.47 points or 1.2 percent to 12,789.48 and the S&P 500 surged 49.45 points or 1.2 percent to 4,166.82.

The rebound on Wall Street partly reflected bargain hunting, with traders picking up stocks at reduced levels following last week's sell-off.

The Dow slumped to its lowest closing level in seven months last Friday, while the S&P 500 slid to a new five-month closing low.

The steep drop seen last week reflected ongoing concerns about the outlook for interest rates as well as worries about the conflict in the Middle East.

The advance by the Dow came amid a strong gain by shares of McDonald's (MCD), with the fast food giant jumping by 1.7 percent after reporting third quarter results that exceeded analyst estimates on both the top and bottom lines.

Meanwhile, traders continued to look ahead to the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

With the Fed widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the potential for further rate hikes.

CME Group's FedWatch Tool is currently indicating a 98.2 percent chance the Fed will leave rates unchanged this week and a 74.1 percent chance rates will remain unchanged in December.

Following the Fed announcement, the Labor Department's closely watched monthly employment report is likely to move into the spotlight later in the week.

Sector News

Retail stocks extended the rally seen last Friday, with the Dow Jones U.S. Retail Index surging by 2.5 percent, climbing further off the five-month closing low set last Thursday.

Considerable strength was also visible among transportation stocks, driving the Dow Jones Transportation Average up by 2.0 percent. The average ended last Friday's trading at its lowest closing level in six months.

Telecom stocks also turned in a strong performance on the day, as reflected by the 2.0 percent gain posted by the NYSE Arca North American Telecom Index.

Software, banking and pharmaceutical stocks also saw significant strength, while networking stocks showed a substantial move to the downside.

The NYSE Arca Networking Index plunged by 3.1 percent, with CommScope Holding (COMM) leading the way lower after warning of weaker than expected third quarter results and lowering its full-year guidance.

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 slumped by 1.0 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed 0.5 percent, the French CAC 40 Index rose by 0.4 percent and the German DAX Index edged up by 0.2 percent.

In the bond market, treasuries regained ground after coming under pressure in early trading but remained in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.0 basis points to 4.875 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to reports on home prices, consumer confidence and Chicago-area business activity, although activity may remain subdued as the Fed announcement looms.

On the earnings front, Amgen (AMGN), Caterpillar (CAT), JetBlue (JBLU) and Pfizer (PFE) are among the companies due to report their quarterly results before the start of trading on Tuesday.