Stocks Give Back Ground After Seeing Early Strength - U.S. Commentary

(RTTNews) - After moving moderately higher in early trading on Monday, stocks have given back some ground over the course of the session. The major averages have pulled back off their best levels of the day, with the Nasdaq sliding into negative territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 5.44 points or 0.1 percent at 5,086.65, the Dow is up 37.94 points or 0.2 percent at 18,118.08 and the S&P 500 is up 1.13 points or 0.1 percent at 2,118.82.

The early strength on Wall Street partly reflected the recent upward momentum for the markets, with traders largely reacting positively to the quarterly earnings season.

A positive reaction to results from tech giants Microsoft (MSFT), Amazon (AMZN), and Google (GOOG) helped lift the Nasdaq and the S&P 500 to record closing highs last Friday.

Nonetheless, traders seemed reluctant to continue buying stocks ahead of the Federal Reserve's monetary policy announcement.

The Fed is scheduled to hold a two-day meeting this week, culminating with the announcement of its latest policy decision Wednesday afternoon.

The central bank is not expected to announce an increase in interest rates, but traders will be paying close attention for any hints at a rate hike at the June meeting. A recent batch of disappointing economic data has led many analysts to predict that the Fed will delay its first rate hike until later in the year.

Traders are also looking ahead to the release of quarterly results from Apple (AAPL), with the tech giant due to release its second quarter results after the close of today's trading.

Ford (F), Merck (MRK), Pfizer (PFE), Time Warner (TWX), Exxon Mobil (XOM), and Visa (V) are among the slew of other companies due to report their quarterly results later this week.

Economic data may also attract attention in the coming days, as traders are likely to keep an eye on reports on first quarter GDP, consumer confidence, personal income and spending, and manufacturing activity.

Sector News

Despite the lackluster performance being turned in by the broader markets, substantial strength remains visible among gold stocks. The NYSE Arca Gold Bugs Index has surged up by 4 percent, reaching its best intraday level in almost two months.

The strength in the gold sector comes amid a sharp increase by the price of the precious metal, with gold for June delivery jumping $26.50 to $1,201.50 an ounce.

Oil service stocks also continue to turn in a strong performance on the day, with the Philadelphia Oil Service Index climbing by 2 percent. The gains by oil service stocks come amid a modest increase by the price of crude oil.

Meanwhile, considerable weakness has emerged among biotechnology stocks, as reflected by the 2.9 percent loss being posted by the NYSE Arca Biotechnology Index. ImmunoGen (IMGN) has helped to lead the sector lower, tumbling by 10.5 percent.

Utilities, health care, and trucking stocks have also come under pressure, contributing to the pullback by the broader markets.

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 edged down by 0.2 percent, while Hong Kong's Hang Seng Index surged up by 1.3 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index jumped by 1.3 percent and the German DAX Index skyrocketed by 1.9 percent.

In the bond market, treasuries are seeing modest weakness following the strength seen in the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2 basis points at 1.937 percent.