Stocks Move Sharply Higher Following Last Week's Pullback - U.S. Commentary

(RTTNews) - Following the significant weakness seen last week, stocks showed a strong move back to the upside during trading on Monday. The markets benefited from a number of positive catalysts, although the major averages remained well below their recent highs.

After moving sharply higher in early trading, the major averages remained firmly positive throughout the session. The Dow soared 263.65 points or 1.5 percent to 17,976.31, the Nasdaq jumped 56.22 points or 1.2 percent to 4,947.44 and the S&P 500 surged up 25.22 points or 1.2 percent to 2,086.24.

The strength on Wall Street was partly due to bargain hunting following last week's pullback, which dragged the Dow and the Nasdaq down to their lowest intraday levels in over a month last Thursday.

Buying interest was also generated by comments from People's Bank of China governor Zhou Xiaochuan that generated optimism about additional stimulus.

Xiaochuan said the Chinese economy has slowed "a bit too sharply" and warned the country needs to be vigilant about signs of deflation.

News on the merger-and-acquisition front also generated some positive sentiment, with Hyperion Therapeutics (HPTX) and Auspex Pharmaceuticals (ASPX) posting standout gains after agreeing to be acquired by Horizon Pharma (HZNP) and Teva (TEVA), respectively.

On the economic front, the National Association of Realtors released a report showing that pending home sales jumped to their highest level in twenty months in February.

NAR said its pending home sales index surged up 3.1 percent to 106.9 in February after climbing 1.2 percent to a slightly downwardly revised 103.7 in January. Economists had expected the index to edge up by 0.3 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the bigger than expected increase, the pending home sales index reached its highest level since hitting 109.4 in June of 2013.

Traders were also presented with a report from the Commerce Department showing that personal income rose by slightly more than expected in the month of February.

The Commerce Department said personal income climbed by 0.4 percent in February, matching the upwardly revised increase seen in January. Economists had been expecting income to rise by 0.3 percent.

Meanwhile, the report also showed that personal spending inched up by 0.1 percent in February after dipping by 0.2 percent in January. Spending had been expected to edge up by 0.2 percent.

Sector News

Most of the major sectors moved notably higher on the day, reflecting the broad based buying interest on Wall Street.

Oil stocks posted particularly strong gains, driving the NYSE Arca Oil & Index up by 2.1 percent. With the gain, the index reached its best closing level in almost a month.

The strength among oil stocks came despite a modest decrease by the price of crude oil, as crude for May delivery fell $0.19 to $48.68 a barrel.

Considerable strength was also visible among telecom stocks, as reflected by the 1.9 percent gain posted by the NYSE Arca Telecom Index. The gain by the index came after it ended the previous session at a nearly two-month closing low.

Financial, natural gas, utilities, and housing stocks also saw significant strength on the day, while gold stocks were among the few groups to buck the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index surged up by 1.5 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index climbed by 1 percent and the German DAX Index jumped by 1.8 percent.

In the bond market, treasuries ended the day modestly lower after showing a lack of direction for much of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.5 basis points to 1.963 percent.

Looking Ahead

Economic data may continue to attract attention on Tuesday, with traders likely to keep an eye on reports on home prices, consumer confidence, and Chicago-area business activity.