Nasdaq, S&P 500 Reach New Record Closing Highs

(RTTNews) - Stocks showed a lack of direction early in the session on Monday but moved notably higher over course of the trading day. The major averages all moved to the upside, with the Nasdaq and the S&P 500 reaching new record closing highs.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Nasdaq jumped 168.14 points or 1.0 percent to 17,857.02, the S&P 500 advanced 41.63 points or 0.8 percent to 5,473.23 and the Dow climbed 188.94 points or 0.5 percent to 38,778.10.

Traders initially seemed reluctant to make significant moves as they took a moment to assess the recent activity in the markets and the near-term outlook.

Buying interest emerged over the course of the session, however, with stocks potentially benefiting from the positive sentiment generated last week.

Tamer-than-expected inflation data led to strong gains by the Nasdaq and the S&P 500 last week, although the narrower Dow bucked the uptrend.

While Federal Reserve officials forecast just one interest rate cut this year following last Wednesday's monetary policy meeting, traders remain hopeful the predictions will turn out to be overly conservative if inflation continues to slow in the coming months.

Meanwhile, traders continued to look ahead to the release of some key economic data this, with reports on retail sales and industrial production are likely to be in the spotlight.

On the U.S. economic front, the Federal Reserve Bank of New York released a report this morning showing New York manufacturing activity contracted at a notably slower rate in the month of June.

The New York Fed said its general business conditions index climbed to a negative 6.0 in June from a negative 15.6 in May, although a negative reading still indicates contraction. Economists had expected the index to rise to a negative 9.0.

Despite the continued contraction in current activity, the New York Fed said optimism about the six-month outlook picked up to its highest level in more than two years.

Sector News

Oil service stocks moved sharply higher along with the price of crude oil, with the Philadelphia Oil Service Index surging by 2.1 percent after ending last Friday's trading at a four-month closing low.

Considerable strength also emerged among computer hardware stocks, as reflected by the 2.0 percent jumped by the NYSE Arca Computer Hardware Index.

Airline stocks also showed a significant move to the upside on the day, driving the NYSE Arca Airline Index up by 1.7 percent.

Semiconductor, banking and software stocks also saw notable strength, while utilities and telecom stocks bucked the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.8 percent, while China's Shanghai Composite Index slid by 0.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index rose by 0.4 percent and the French CAC 40 Index advanced by 0.9 percent.

In the bond market, treasuries gave back ground after trending higher over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.6 basis points to 4.279 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the U.S. economic reports on retail sales and industrial production.