Stocks Extend Recent Upward Trend With Modestly Higher Close - U.S. Commentary

(RTTNews) - Stocks moved modestly higher over the course of the trading day on Monday, adding to the strong gains posted last week. While buying interest was somewhat subdued, the markets still extended the upward trend seen in recent weeks.

The major averages gave back some ground going into the close but managed to end the day in positive territory. The Dow edged up 19.96 points or 0.1 percent to 15,484.26, the Nasdaq rose 7.41 points or 0.2 percent to 3,607.49 and the S&P 500 inched up 2.31 points or 0.1 percent to 1,682.50.

With the modest gains on the day, the Dow and the S&P 500 reached new record closing highs, while the Nasdaq reached its best closing level since 2000.

The modest strength that emerged on Wall Street came following the release of a mixed batch of economic data, including a report from the Commerce Department showing weaker than expected retail sales growth.

The disappointing retail sales data may have further offset recent concerns about the outlook for the Federal Reserve's stimulus program.

Before the start of trading, the Commerce Department said retail sales increased by 0.4 percent in June compared to a downwardly revised 0.5 percent increase in May. Economists had been expecting retail sales to jump by 0.8 percent.

Excluding a notable increase in auto sales, retail sales came in unchanged in June versus economist estimates for a 0.5 percent increase.

Separately, the New York Federal Reserve released a report showing that conditions for New York manufacturers have continued to improve modestly in July.

The New York Fed said its general business conditions index rose to 9.5 in July from 7.8 in June, with a positive reading indicating an increase in regional manufacturing activity. The increase surprised economists, who had been expecting the index to drop to 5.0.

A separate report from the Commerce Department showing that business inventories edged up by 0.1 percent in May, while business sales surged up by 1.1 percent.

Among individual stocks, shares of Citigroup (C) rose by 2 percent after the financial giant reported stronger than expected second quarter earnings.

Leap Wireless (LEAP) also posted a standout gain after the wireless services provider agreed to be acquired by AT&T (T) for about $1.2 billion. Shares of Leap surged up by 112.4 percent on the news.

Meanwhile, shares of AngloGold (AU) fell by 2.4 percent after the gold producer downwardly revised its full-year output guidance.

Sector News

While most of the major sectors ended the day showing only modest moves, considerable strength was visible among utilities stocks. The Dow Jones Utilities Average advanced by 1.6 percent, reaching its best closing level in almost two months.

FirstEnergy (FE) and PSEG (PEG) turned in two of the utilities sector's best performances, rising by 2.7 percent and 2.3 percent, respectively.

Significant strength also emerged among trucking stocks, as reflected by the 1.6 percent gain posted by the Dow Jones Trucking Index. The gain lifted the index to a record closing high.

Tobacco, airline, and steel stocks also saw notable strength on the day, while housing stocks showed a sizable move to the downside. The Philadelphia Housing Sector Index fell by 1.7 percent, partly offsetting last week's strong gains.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, although the Japanese markets were closed for a public holiday. Hong Kong's Hang Seng Index edged up by 0.1 percent, while China's Shanghai Composite Index advanced by 1 percent.

The major European markets also moved to the upside on the day. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both climbed by 0.6 percent.

In the bond market, treasuries closed firmly in positive territory following the disappointing retail sales data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.5 basis points to 2.556 percent.

Looking Ahead

Trading on Tuesday may be impacted by another batch of economic data, including reports on consumer prices, industrial production, and homebuilder confidence.

On the earnings front, Coca-Cola (KO), Goldman Sachs (GS), and Johnson & Johnson (JNJ) are among the big-name companies scheduled to release their quarterly results before the start of trading on Tuesday.