Stocks Close Roughly Flat After Seeing Early Weakness - U.S. Commentary

(RTTNews) - After coming under pressure in early trading, stocks regained ground to end the session nearly unchanged. The roughly flat close came on the heels of the strong upward move seen last week.

The major averages finished the session mixed. While the Nasdaq inched up 6.41 points or 0.1 percent to 4,620.37, the Dow slipped 17.12 points or 0.1 percent to 16,449.18 and the S&P 500 edged down 0.86 points or less than a tenth of a percent to 1,939.38.

The early weakness on Wall Street came amid a sharp drop by the price of crude oil as well as the release of some disappointing Chinese manufacturing data.

Crude oil for March delivery tumbled $2 to $31.26 a barrel after rising $0.33 or 0.1 percent to $33.62 a barrel in the previous week.

The pullback by the price of crude came after a report from the Chinese National Bureau of Statistics showed that the Chinese manufacturing sector contracted at a faster rate in January,

The report said the index of activity in the Chinese manufacturing sector edged down to 49.4 in January from 49.7 in December. The non-manufacturing index also slipped, easing 0.9 points to 53.5.

On the U.S. economic front, the Commerce Department released a report showing that personal income rose in line with economist estimates in December, although the report also said personal spending came in virtually unchanged.

The report said personal income climbed by 0.3 percent in December, matching the increase seen in November as well as economist estimates.

Meanwhile, the Commerce Department said personal spending edged down by less than 0.1 percent in December after rising by 0.5 percent in the previous month. Spending had been expected to inch up by 0.1 percent.

A separate report from the Institute for Supply Management showed that U.S. manufacturing activity continued to contract in January.

The ISM said its purchasing managers index inched up to 48.2 in January from a downwardly revised 48.0 in December, but a reading below 50 continues to indicate a contraction in manufacturing activity.

Economists had expected the index to climb to a reading of 48.3 from the 48.2 originally reported for the previous month.

The Commerce Department also released a report showing that construction spending rose less than expected in the month of December.

Sector News

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

Energy stocks saw considerable weakness, however, moving lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 2.7 percent, while the NYSE Arca Natural Gas Index and the NYSE Oil & Gas Index tumbled by 2.4 percent and 1.8 percent, respectively.

On the other hand, gold stocks showed a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 3.1 percent. The strength in the sector came as gold for April delivery climbed $11.60 to $1,128 an ounce.

Airline, trucking and computer hardware stocks also saw notable strength, helping to offset the weakness seen in the energy sector.

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 jumped by 2 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index dropped by 0.5 percent, the U.K.'s FTSE 100 Index and the German DAX Index both dipped by 0.4 percent.

In the bond market, treasuries gave back some ground after moving notably higher last week. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 3.5 basis points to 1.966 percent.

Looking Ahead

Amid a quiet day on the economic front, trading on Tuesday may be impacted by reaction to earnings news from Dow Chemical (DOW) and Exxon Mobil (XOM), which are due to release their quarterly results before the start of trading.