Stocks Close Mixed Following Another Lackluster Trading Day - U.S. Commentary

(RTTNews) - Extending the lackluster performance seen over the past few sessions, treasuries showed a lack of direction for much of the trading day on Monday. The major averages eventually ended the day mixed, although the S&P 500 still reached a new record closing high.

After moving lower in early trading, the Nasdaq remained stuck in the red throughout the session before closing down 17.54 points or 0.4 percent at 4,671.00.

On the other hand, the Dow inched up 13.01 points or 0.1 percent to 17,647.75 and the S&P 500 ticked up 1.50 points or 0.1 percent to 2,041.32.

The choppy trading on Wall Street came as traders expressed uncertainty about the global economic outlook following mixed developments overseas.

Some negative sentiment was generated by the release of data indicating that Japan has unexpectedly slipped into a recession.

A report released by Japan's Cabinet Office showed that Japanese GDP contracted by an annualized 1.6 percent in the third quarter, while economists had expected a 2.2 percent increase.

Following the 7.3 percent drop seen in the second quarter, Japanese GDP has now contracted for two straight quarters, which represents the technical definition of a recession.

However, concerns about the global economy were partly offset by comments from European Central Bank President Mario Draghi, who indicated that the ECB is willing to consider purchasing government bonds to stimulate the economy.

In testimony to the European Parliament, Draghi said the "Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate."

"In this context, we have also tasked relevant ECB staff and Eurosystem committees with the timely preparation of further measures to be implemented, if needed," he added.

On the U.S. economic front, the Federal Reserve released a report before the start of trading showing an unexpected drop in industrial production in the month of October.

The Fed said industrial production edged down by 0.1 percent in October following a downwardly revised 0.8 percent increase in September. Economists had expected production to inch up by 0.2 percent.

Meanwhile, traders were also digesting the latest news on the merger-and-acquisition front, with shares of Baker Hughes (BHI) surging higher after the oil services provider agreed to be acquired by rival Halliburton (HAL) for $34.6 billion.

Botox maker Allergan (AGN) also posted standout gain after agreeing to be acquired by Actavis (ACT) for $66 billion in cash and stock.

Sector News

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

Gold stocks showed a strong move to the upside, however, with the NYSE Arca Gold Bugs Index surging up by 1.9 percent. The strength in the gold sector came despite a modest decrease by the price of the precious metal.

Within the gold sector, Allied Nevada Gold (ANV) and Tanzanian Royalty Exploration Corp. (TRX) posted standout gains, jumping by 21.9 percent and 14.4 percent, respectively.

Considerable strength was also visible among utilities stocks, as reflected by the 1.3 percent gain posted by the Dow Jones Utilities Average. The gain by the average came after it closed lower for four consecutive sessions.

On the other hand, internet stocks came under pressure on the day, contributing to the loss posted by the tech-heavy Nasdaq. The Dow Jones Internet Index fell by 1.1 percent after ending the previous session at a two-month closing high.

Brokerage, airline, and trucking stocks also moved to the downside, partly offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure on Monday on the heels of the disappointing Japanese GDP data. Japan's Nikkei 225 Index tumbled by 3 percent, while Hong Kong's Hang Seng Index slumped by 1.2 percent.

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

In the bond market, treasuries turned lower over the course of the session after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ticked up by 2 basis points to 2.34 percent.

Looking Ahead

Economic data may attract some attention on Tuesday, with traders likely to keep an eye on reports on producer price inflation and homebuilder confidence.

Trading could also be impacted by earnings news from Dow component Home Depot (HD), as the home improvement retailer is due to report its third quarter results before the start of trading.