Major Averages Finish Lackluster Session Modestly Lower - U.S. Commentary

(RTTNews) - Following the strength that was seen last week, stocks showed a lack of direction throughout the trading session on Monday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the session modestly lower. The Dow slipped 22.25 points or 0.1 percent to 21,184.04, the Nasdaq dipped 10.11 points or 0.2 percent to 6,295.68 and the S&P 500 edged down 2.97 points or 0.1 percent to 2,436.10.

The choppy trading on Wall Street came as traders expressed some uncertainty about the near-term outlook for the markets following recent strength.

The upward move seen over the course of the previous week lifted all three of the major averages to new record closing highs.

Traders may be looking ahead to highly anticipated congressional testimony by former FBI Director James Comey scheduled for Thursday.

Comey is expected to be questioned about his communications with President Donald Trump amid claims the president urged him to drop a federal investigation of former National Security Adviser Michael Flynn.

On the U.S. economic front, the Institute for Supply Management released a report showing a modest slowdown in the pace of growth in the service sector in the month of May.

The ISM said its non-manufacturing index edged down to 56.9 in May from 57.5 in April, although a reading above 50 indicates continued growth in the service sector. Economists had expected the index to dip to 57.0.

"Although the non-manufacturing sector's growth rate dipped in May, the sector continues to reflect strength, buoyed by the strong rate of growth in the Employment Index," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

He added, "The majority of respondents' comments continue to indicate optimism about business conditions and the overall economy."

A separate report from the Commerce Department showed a modest drop in factory orders in April, while revised data from the Labor Department showed that labor productivity was unchanged in the first quarter.

Sector News

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

Biotechnology stocks came under considerable selling pressure, however, with the NYSE Arca Biotechnology Index sliding by 1.3 percent. The index gave back ground after moving sharply higher over the three previous sessions.

Newlink Genetics (NLNK) Juno Therapeutics (JUNO) and XBiotech (XBIT) turned in some of the biotech sector's worst performances.

Railroad and housing stocks also saw some weakness on the day, while gold stocks moved to the upside over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index closed just below the unchanged line, while China's Shanghai Composite Index fell by 0.5 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index slid by 0.7 percent, the U.K.'s FTSE 100 Index dropped by 0.3 percent. The German markets were closed for a holiday.

In the bond market, treasuries gave back some ground following the rally seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 2.182 percent.

Looking Ahead

The economic calendar is relatively quiet on Tuesday, although the Labor Department is due to release a report on job openings and labor turnover in April.