Stocks Close Nearly Flat Following Choppy Trading Day - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout the trading day on Monday before ending the session nearly flat. The choppy trading came on the heels of last week's rally, which lifted the Dow and the S&P 500 to record closing highs.

The major averages eventually finished the day on opposite sides of the unchanged line. While the Nasdaq inched up 8.17 points or 0.2 percent to 4,638.91, the Dow dipped 24.28 points or 0.1 percent to 17,366.24 and the S&P 500 edged down 0.24 points or less than a tenth of a percent to 2,017.81.

The lackluster performance on Wall Street came as some traders stayed on the sidelines ahead of tomorrow's midterm elections.

In the elections, Republicans are expected to increase their majority in the House and potentially retake control of the Senate.

Traders were also looking ahead to the release of some key economic data later in the week, including the closely watched monthly jobs report.

The Institute for Supply Management released a report this morning showing that U.S. manufacturing activity unexpectedly grew at a faster pace in the month of October.

The ISM said its index of manufacturing activity climbed to 59.0 in October from 56.6 in September, with a reading above 50 indicating growth in the sector. The increase came as a surprise to economists, who had expected the index to dip to 56.0.

With the unexpected increase, the manufacturing index matched the reading reported for August, which is the highest reading for the index since March of 2011.

The U.S. data is at odds with disappointing readings on manufacturing activity in China and Europe, leading to uncertainty about the outlook for the global economy.

A separate report from the U.S. Commerce Department showed an unexpected drop in construction spending in the month of September.

Sector News

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

Gold stocks moved sharply higher over the course of the session, however, with the NYSE Arca Gold Bugs Index surging up by 2.7 percent. With the gain, the index bounced off the six-year closing low set in the previous session.

The rebound by gold stocks came despite a modest decrease by the price of the precious metal, as gold for December delivery slid $1.80 to $1,169.80 an ounce.

Airline, networking, and electronic storage stocks also saw some strength on the day, although buying interest was relatively subdued.

On the other hand, energy stocks showed a substantial move to the downside on the day, moving lower along with the price of crude oil. Crude for December delivery tumbled $1.76 to $78.78 a barrel, a two-year low.

Steel stocks also came under pressure on the day, dragging the NYSE Arca Steel Index down by 1.6 percent. The weakness in the sector partly reflected concerns about the outlook for demand from China.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Hong Kong's Hang Seng Index fell by 0.3 percent, while China's Shanghai Composite Index rose by 0.4 percent. The Japanese markets were closed for a holiday.

Meanwhile, the major European markets all moved to the downside on the day. While the German DAX Index dropped by 0.8 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both slumped by 0.9 percent.

In the bond market, treasuries ended the day modestly lower but well off their worst levels of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 2.348 percent.

Looking Ahead

While the midterm elections are likely to remain in focus on Tuesday, trading could also be impacted by reports on the U.S. trade deficit and new orders for manufactured goods.

On the earnings front, Burger King (BKW), CVS Health (CVS), Office Depot (ODP), and Priceline (PCLN) are among the companies due to report their quarterly results before the start of trading on Tuesday.