U.S. Stocks Move Mostly Higher, Extending Last Week's Rally

(RTTNews) - Stocks moved mostly higher over the course of the trading session on Monday, adding to the strong gains last week. The Nasdaq and the S&P 500 climbed firmly into positive territory, although the narrower Dow ended the day little changed.

While the Dow inched up 0.86 points or less than a tenth of a percent to 37,306.02, the Nasdaq rose 21.37 points or 0.5 percent to 4,740.56 and the S&P 500 climbed 90.89 points or 0.6 percent to 14,904.81.

Stocks continued to benefit from recent upward momentum, which has propelled the Dow to new record highs. The Nasdaq and the S&P 500 have also reached their best levels in nearly two years.

The major averages have moved higher for seven consecutive weeks due in part to optimism about the outlook for interest rates, with last week's rally coming as the Federal Reserve's latest projections hinted at three rate cuts next year.

However, several Fed officials have subsequently pushed back on investor hopes that rate cuts by the central bank are imminent.

Chicago Fed President Austan Goolsbee told CNBC's "Squawk Box" he was confused by the reaction to the Fed announcement, which saw both stocks and bonds move sharply higher.

"It's not what you say, or what the chair says. It's what did they hear, and what did they want to hear," Goolsbee said. "I was confused a bit — was the market just imputing, here's what we want them to be saying?"

Nonetheless, CME Group's FedWatch Tool still suggests there is a good chance the Fed will lower interest rates by a quarter point in March.

Later this week, the Commerce Department is due to release its report on personal income and spending in the month of November, which includes readings on inflation said to be preferred by the Fed.

The National Association of Home Builders released a report this morning showing homebuilder sentiment in the U.S. rebounded in December after falling for four consecutive months.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 37 in December after falling to an eleven-month low of 34 in November. Economists had expected the index to rise to 36.

Sector News

Steel stocks saw substantial strength on the day, resulting in a 3.2 percent spike the NYSE Arca Steel Index.

U.S. Steel (X) led the sector higher, skyrocketing by 26.1 percent after announcing an agreement to be acquired by Japan's Nippon Steel for $55.00 per share in cash.

Significant strength also emerged among retail stocks, as reflected by the 1.6 percent gain posted by the Dow Jones U.S. Retail Index. The index reached its best closing level in well over a year.

Oil producer and pharmaceutical stocks also saw strength on the day, while housing and banking stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index fell by 0.6 percent, while Hong Kong's Hang Seng Index slumped by 1.0 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index climbed by 0.5 percent, the French CAC 40 Index declined by 0.4 percent and the German DAX Index slid by 0.6 percent.

In the bond market, treasuries gave back ground after moving sharply higher last week. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.6 basis points to 3.954 percent.