Stocks Advance Amid Relatively Quiet Trading Day - U.S. Commentary

(RTTNews) - On the heels of the pullback seen last week, stocks moved notably higher over the course of the trading session on Monday. The major averages initially showed a lack of direction but climbed firmly into positive territory as the day progressed.

The major averages ended the session just off their best levels of the day. The Dow climbed 117.52 points or 0.7 percent to 17,891.16, the Nasdaq advanced 42.24 points or 0.9 percent to 4,817.59 and the S&P 500 rose 16.13 points or 0.8 percent to 2,081.43.

The strength on Wall Street was partly due to bargain hunting, as traders picked up stocks at reduced levels following recent weakness.

The decline seen last week dragged the tech-heavy Nasdaq down to its lowest levels in a month, while the Dow hit a two-week low.

Trading activity remained relatively light, however, with traders looking ahead to the release of the Labor Department's closely watched monthly jobs report on Friday.

The report is expected to show an increase of about 200,000 jobs in April, and the unemployment index is expected to edge down to 4.9 percent.

The data could have a significant impact on the outlook for whether the Federal Reserve will raise interest rates at its next meeting in June.

Some traders may also have been away from their desks in observance of May Day holidays in other parts of the world.

On the U.S. economic front, the Institute for Supply Management released a report this morning showing a slowdown in the pace of growth in the manufacturing sector in April.

The ISM said its purchasing managers index dipped to 50.8 in April from 51.8 in March, although a reading above 50 indicates growth in the manufacturing sector. Economists had expected the index to edge down to 51.5.

A separate report from the Commerce Department showed that construction spending rose 0.3 percent in March following an upwardly revised 1.0 percent jump in February.

Sector News

Commercial real estate stocks showed a strong move to the upside on the day, driving the Morgan Stanley REIT Index up by 1.7 percent. Despite the gain, the index remained stuck in a recent range.

FelCor Lodging Trust (FCH), Parkway Properties (PKY) and Mack-Cali Realty (CLI) turned in some of the sector's best performances.

Significant strength was also visible among retail stocks, as reflected by the 1.6 percent gain posted by the Dow Jones Retail Index. J.C. Penney (JCP) posted a standout gain after a positive mention in Barron's over the weekend.

Software, tobacco and housing stocks also saw significant strength, while gold, electronic storage, and oil service stocks moved the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved lower on Monday, although several markets were closed for May Day. Japan's Nikkei 225 Index plunged by 3.1 percent, while India's BSE Sensex Index fell by 0.7 percent.

Meanwhile, the major European markets moved to the upside on the day. While the German DAX Index advanced by 0.8 percent, the French CAC 40 Index rose by 0.3 percent. The U.K. markets were closed on the day.

In the bond markets, treasuries pulled back after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.6 basis points to 1.865 percent.

Looking Ahead

Trading activity may remain relatively subdued on Tuesday, with a lack of major U.S. economic due to be released on the day.