Stocks Close Mixed Following Lackluster Trading Session - U.S. Commentary

(RTTNews) - After seeing some strength last week, treasuries turned in a lackluster performance throughout the trading session on Monday. The major averages showed modest moves for much of the session before eventually ending the day mixed.

While the Dow and S&P 500 pulled back off last Friday's record highs, the Nasdaq closed modestly higher. The Nasdaq inched up 3.36 points or 0.1 percent to 3,692.95, while the Dow dipped 46.23 points or 0.3 percent to 15,612.13 and the S&P 500 slipped 2.53 points or 0.2 percent to 1,707.14.

The choppy trading on Wall Street came as traders continued to digest last Friday's monthly jobs report, which showed weaker than expected job growth but a drop by the unemployment rate.

The mixed jobs report has generated some uncertainty about the outlook for the economy as well as the Federal Reserve's asset purchase program.

Traders were also presented with a report from the Institute for Supply Management showing that activity in the U.S. service sector grew at a faster rate in the month of July.

The ISM said its non-manufacturing index jumped to 56.0 in July from 52.2 in June, with a reading above 50 indicating growth in the service sector. Economists had been expecting the index to show a more modest increase to a reading of 53.0.

The better than expected reading on service sector activity comes after the ISM released a separate report last Thursday showing its manufacturing index at a two-year high.

Chris Low, chief economist at FTN Financial, said, "The Fed watches the ISM indices, but they are not likely to influence policy unless they translate into stronger job growth."

Among individual stocks, shares of HSBC (HBC) came under pressure on the day, with the banking giant falling by 4.5 percent after reporting disappointing first half results.

Mobile-chip maker Qualcomm (QCOM) also moved to the downside after Piper Jaffray downgraded its rating on the company's stock to Neutral from Overweight.

Meanwhile, shares of Tyson Foods (TSN) moved notably higher after the poultry producer reported better than expected third quarter results.

Sector News

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

While some weakness was visible among housing, transportation and utilities stocks, healthcare provider, electronic storage, and health insurance stocks showed notable moves to the upside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while China's Shanghai Composite Index advanced by 1 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index inched up by 0.1 percent, the German DAX Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index fell by 0.4 percent.

In the bond market, treasuries showed a notable move to the downside on the heels of the ISM report. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.8 basis points to 2.64 percent.

Looking Ahead

Trading on Tuesday may be impacted by the release of a report from the Commerce Department regarding the U.S. trade balance in the month of June. Economists expect the trade deficit to narrow to $43.0 billion in June from $45.0 billion in May.

On the earnings front, CVS Caremark (CVS), Tenet Healthcare (THC), and OfficeMax (OMX) are among the companies due to release their quarterly results before the start of trading on Tuesday.