Stocks Fluctuate But Manage To Close Mostly Higher - U.S. Commentary

(RTTNews) - After failing to sustain an early move to the upside, stocks fluctuated over the course of the trading session on Monday but managed to close mostly higher. The gains on the day partly offset the steep losses posted last Friday.

The major averages all closed in positive territory, although the Nasdaq inched up only 1.73 points or less than a tenth of a percent to 4,828.96. The Dow advanced 125.61 points or 0.8 percent to 16,510.19, and the S&P 500 climbed 8.94 points or 0.5 percent to 1,966.97.

The higher close on Wall Street came as traders picked up stocks at somewhat reduced levels on the heels of last Friday's sell-off, which came as the Federal Reserve's decision to leave interest rates unchanged pointed to a continued period of uncertainty.

In an interview with CNBC, St. Louis Fed President James Bullard said the central bank could raise rates next month but noted that many things can change from one meeting to the next.

"There's a powerful case to be made that it's time to raise interest rates," Bullard said. "And the case is not complicated."

"Policy settings are [in] an emergency," he added. "The economy itself, the goals of the committee, have essentially been met."

Bullard, who is not a voting member of the Fed's policy setting committee, said he would have joined Richmond Fed President Jeffrey Lacker in dissenting against the Fed's decision to leave rates unchanged.

On the U.S. economic front, the National Association of Realtors released a report showing a much bigger than expected decrease in existing home sales in August.

NAR said existing home sales tumbled by 4.8 percent to a seasonally adjusted annual rate of 5.31 million in August from 5.58 million in July. Economists had been expecting existing home sales to dip to a rate of 5.50 million.

Later in the week, trading could be impacted by reaction to reports on durable goods orders, new home sales, and consumer sentiment.

The data could have a significant impact on the outlook for whether the Fed will raise rates at its meeting next month.

Sector News

Many of the major sectors ended the day showing only modest moves, although substantial weakness was visible among biotechnology stocks. Reflecting the weakness in the biotech sector, the NYSE Arca Biotechnology Index plunged by 3.7 percent.

The weakness in the biotech sector was attributed to a Twitter post from Democratic presidential frontrunner Hillary Clinton, who said she would unveil a plan to take on "outrageous" price gouging in the specialty drug market.

Gold stocks also moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 3.3 percent. The losses by gold stocks came as the price of gold for December delivery slid $5 to $1,132.80 an ounce.

On the other hand, brokerage stocks turned in a strong performance, resulting in a 1.4 percent gain by the NYSE Arca Broker/Dealer Index. LPL Financial (LPLA) and BGC Partners (BGCP) posted standout gains.

Notable strength was also visible among software stocks, as reflected by the 1.3 percent gain posted by the Dow Jones Software Index. Adobe Systems (ADBE) helped lead the sector higher, climbing by 2.6 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. Hong Kong's Hang Seng Index fell by 0.8 percent, while Australia's All Ordinaries Index tumbled by 1.9 percent. The Japanese markets were closed for a holiday.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index surged up by 1.1 percent, the German DAX Index rose by 0.3 percent and the U.K.'s FTSE 100 Index inched up by 0.1 percent.

In the bond market, treasuries came under pressure after rising sharply in reaction to the Fed decision. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.4 basis points to 2.214 percent.

Looking Ahead

Tuesday represents a relatively quiet day on the U.S. economic front, potentially leading to below average trading activity.