Stocks Extend Uptrend With Modestly Higher Close - U.S. Commentary

(RTTNews) - Stocks added to recent gains during trading on Monday, although buying interest was somewhat subdued throughout the session. The upward move lifted the Dow and the S&P 500 to new record closing highs, while the Nasdaq reached its best levels of 2016.

The major averages all closed in positive territory, although the tech-heavy Nasdaq outperformed its counterparts. While the Nasdaq climbed 26.19 points or 0.5 percent to 5,055.78, the Dow inched up 16.50 points or 0.1 percent to 18,533.05 and the S&P 500 edged up 5.15 points or 0.2 percent to 2,166.89.

The strength on Wall Street was partly in reaction to upbeat earnings news from financial giant Bank of America (BAC), which released its second quarter results before the start of trading.

Bank of America reported better than expected quarterly earnings and revenues, joining Citigroup (C) and JPMorgan Chase (JPM) in beating expectations.

The earnings season will continue to pick up steam as the week progresses, with a slew of big-name companies due to report their quarterly results.

Microsoft (MSFT), American Express (AXP), Intel (INTC), and General Electric (GE) are among the companies due to report their results in the coming days.

Positive sentiment was also generated by news of Softbank's deal to acquire ARM Holdings (ARMH), which contributed to the strength in the tech sector.

Shares of ARM spiked by 40.6 percent after the semiconductor and software design company agreed to be acquired by Softbank for $32 billion in cash.

Meanwhile, the National Association of Home Builders released a report this morning showing an unexpected drop in homebuilder confidence in the month of July.

The report said the NAHB/Wells Fargo Housing Market Index edged down by a point to 59 in July after climbing by two points to 60 in June. Economists had expected the index to inch up to 61.

Sector News

Semiconductor stocks showed a significant move to the upside on the day, driving the Philadelphia Semiconductor Index up by 1.5 percent. With the gain, the index reached its best closing level in over a year.

While ARM led the sector higher, NXP Semiconductors (NXPI), Infinera (INFN), and Taiwan Semiconductor (TSM) also posted notable gains.

Considerable strength was also visible among computer hardware stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Computer Hardware Index. Seagate Technology (STX) posted a standout gain, surging up by 4.3 percent.

Natural gas, steel, and internet stocks also saw some strength on the day, while trucking stocks came under pressure. Reflecting the weakness in the sector, the Dow Jones Trucking Index slumped by 1.8 percent.

J.B. Hunt (JBHT) led the trucking sector lower after reporting weaker than expected second quarter earnings and providing disappointing guidance.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, although the Japanese market was closed for a holiday. Hong Kong's Hang Seng Index advanced by 0.7 percent, while Australia's All Ordinaries Index rose by 0.5 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index climbed by 0.4 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.3 percent.

In the bond market, treasuries fluctuated over the course of the trading session before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.587 percent.

Looking Ahead

Reaction to the latest earnings news may impact trading on Tuesday, with IBM (IBM), Netflix (NFLX), and Yahoo! (YHOO) among the companies due to release their quarterly results after the close of today's trading.

Goldman Sachs (GS), Johnson & Johnson (JNJ), and UnitedHealth (UNH) are also schedule to release their results before the start of trading on Tuesday.

Traders are also likely to keep an eye on the Commerce Department's report on new residential construction in the month of June. Economists expect housing starts to climb to an annual rate of 1.170 million.