Buying Interest Wanes But Stocks Remain Mostly Positive - U.S. Commentary

(RTTNews) - Stocks remain mostly positive in mid-day trading on Monday, although buying interest has waned from earlier in the session. The gains on the day are extending the strong performance that was turned in by the markets last week.

While the Nasdaq has pulled back near the unchanged line, the major averages currently remain in positive territory. The Nasdaq is up 1.35 points or less than 0.1 percent at 3,480.73, while the Dow is up 81.78 points or 0.5 percent at 15,217.62 and the S&P 500 is up 8.31 points or 0.5 percent at 1,640.20.

The strength on Wall Street comes as traders have continued to react positively to last Friday's monthly jobs report, which showed stronger than expected job growth in the month of July.

The increased optimism about the economic outlook seemed to overshadow concerns that the data may lead the Federal Reserve to begin scaling back its stimulus program.

Nonetheless, trading activity has remained somewhat subdued, as some traders remain away from their desks following last week's Independence Day holiday.

Uncertainty about the upcoming earnings season is also keeping some traders on the sidelines, with Alcoa (AA) scheduled to release its second quarter results after the close of trading.

The release of quarterly results from Alcoa is seen as the unofficial start of earnings season, as the aluminum giant is traditionally the first Dow component to report its results.

Peter Boockvar of Morgan Stanley said, "With Q2 corporate earnings about to begin, S&P 500 earnings are expected to be up just 1.8% year-over-year and down by 1% ex financials."

"Revenue growth is expected to be up a modest 1.3% and 1.2% ex financials, which follows revenue growth in Q1 of just 0.6% and 0.3% ex financials," he added.

Sector News

Natural gas stocks are seeing considerable strength in mid-day trading, resulting in a 1.3 percent gain by the NYSE Arca Natural Gas Index. An increase by the price of natural gas is contributing to the strength in the sector, with natural gas for August delivery is climbing $0.11 to $3,727 per million BTUs.

Significant strength is also visible among oil service stocks, as reflected by the 1.1 percent gain being posted by the Philadelphia Oil Service Index. The strength in the oil service sector comes despite a decrease by the price of crude oil.

Retail stocks are also turning in a strong performance on the day, driving the Dow Jones Retail Index up by 1 percent. With the gain, the index has risen to its best intraday level in over a month.

Meanwhile, semiconductor stocks have shown a notable move to the downside, dragging the Philadelphia Semiconductor Index down by 1.6 percent. Intel (INTC) has helped to lead the sector lower following some disappointing analyst comments.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index fell by 1.4 percent, while Hong Kong's Hang Seng Index ended the day down by 1.3 percent.

Meanwhile, the major European showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index rose by 1.2 percent, the French CAC 40 Index and the German DAX Index surged up by 1.9 percent and 2.1 percent, respectively.

In the bond market, treasuries are regaining some ground after falling sharply last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.1 basis points at 2.664 percent.