Stocks Close Modestly Lower But Well Off Worst Levels - U.S. Commentary

(RTTNews) - After showing a notable move to the downside in early trading on Monday, stocks regained some ground as the day progressed but still closed mostly lower. The drop on the day partly offset the strong upward move seen in the previous week.

The major averages ended the session in the red but well off their worst levels of the day. The Dow edged down 23.70 points or 0.1 percent to 17,528.27, the Nasdaq dipped 7.51 points or 0.2 percent to 5,040.99 and the S&P 500 fell 4.49 points or 0.2 percent to 2,056.50.

Profit taking contributed to the lower close on Wall Street, as traders cashed in on the strong gains posted last week.

The pullback by stocks also came amid a notable decrease by the price of crude oil, which retreated after last week's rebound.

Crude oil for February delivery tumbled $1.27 to $36.83 a barrel after jumping $2.04 or 5.7 percent to $38.10 a barrel in the previous week.

Trading activity remained relatively subdued, however, with some traders still away from their desks following the Christmas holiday.

The upcoming week will also be holiday-shortened due to the New Year's Day holiday, which will keep the markets closed on Friday.

The economic calendar for the week is relatively light, although traders are likely to keep an eye on reports on consumer confidence, pending home sales, and Chicago-area business activity.

Sector News

Despite the recovery attempt by the broader markets, substantial weakness remained visible among gold stocks. The NYSE Arca Gold Bugs Index plunged by 4.1 percent after showing a strong upward move last week.

The sell-off by gold stocks came amid a decrease by the price of the precious metal, with gold for February delivery sliding $7.60 to $1,068.30 an ounce.

Energy stocks also ended the session firmly in negative territory moving lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index dove by 3 percent, while the NYSE Arca Oil & Gas Index and the NYSE Arca Natural Gas Index dropped by 2.2 percent and 2.1 percent, respectively.

Steel, electronic storage, and airline stocks also ended the day notably lower, while modest strength was visible among commercial real estate stocks.

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 climbed by 0.6 percent, while Hong Kong's Hang Seng Index slumped by 1 percent.

Meanwhile, the major European markets moved to the downside on the day, with the U.K. markets closed for a holiday. The German DAX Index fell by 0.7 percent, while the French CAC 40 Index tumbled by 1 percent.

In the bond market, treasuries ended the day modestly higher but off their best levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.8 basis points to 2.225 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the latest U.S. economic data, including reports on home prices and consumer confidence.