Stocks Recover From Initial Drop To Close Firmly Positive - U.S. Commentary

(RTTNews) - Stocks showed a substantial turnaround over the course of the trading day on Monday after coming under pressure early in the session. The markets benefited from renewed optimism about lawmakers reaching an agreement to end the latest fiscal crisis.

The major averages moved roughly sideways going into the close, hovering firmly in positive territory. The Dow rose 6415 points or 0.4 percent to 15,301.26, the Nasdaq advanced 23.40 points or 0.6 percent to 3,815.27 and the S&P 500 climbed 6.94 points or 0.4 percent to 1,710.14.

The initial weakness on Wall Street reflected concerns about the apparent lack of significant progress on a deal to reopen the government and raise the debt limit.

While signs of progress toward an agreement helped to drive stocks higher last week, the talks appeared to reach a standstill over the weekend even as the debt limit deadline looms.

However, selling pressure waned not long after the open and stocks bounced well off their lows amid more optimistic signs about an agreement.

Considerable buying interest was generated by news that President Barack Obama is scheduled to meet with the Congressional leadership from both parties at the White House.

The meeting was originally scheduled for 3 pm ET but was later postponed to allow Senate leaders time to continue making important progress toward a solution.

Senate Minority Leader Mitch McConnell, R-Ken., indicated that he has had "very constructive exchanges" with Senate Majority Leader Harry Reid, D-Nev., about how to move forward.

"Those discussions continue, and I share [the] optimism that we're going to get a result that will be acceptable to both sides," McConnell added.

The Senate leaders are said to be considering a proposal from Sen. Susan Collins, R-Maine, that would fund the government and raise the debt ceiling in exchange for changes to Obamacare.

Sector News

Most of the major sectors moved to the upside over the course of the trading day after coming under pressure early in the session.

Steel stocks showed a particularly strong upward move, driving the NYSE Arca Steel Index up by 1.6 percent. With the gain, the index reached its best closing level in almost a month.

Considerable strength also emerged among biotechnology stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Biotechnology Index. Myriad Genetics (MYGN) and Vertex Pharmaceuticals (VRTX) turned in two of the biotech sector's best performances.

Computer hardware stocks also moved notably higher on the day, with the NYSE Arca Computer Hardware Index rising by 1 percent to a thirteen-year closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, although the markets in Japan and Hong Kong were closed for public holidays. Australia's All Ordinaries Index dropped by 0.4 percent, while South Korea's KOSPI Index edged down by 0.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index closed just below the unchanged line, the French CAC 40 Index inched up by 0.1 percent and the U.K.'s FTSE 100 Index rose by 0.3 percent.

The bond markets were closed for the Columbus Day holiday.

Looking Ahead

Trading on Tuesday is likely to be impacted by the outcome of Obama's meeting with Congressional leaders and whether it makes a final agreement seem more likely.

A report on New York manufacturing activity may also attract some attention along with the release of quarterly results from companies such as Citigroup (C), Coca-Cola (KO), and Johnson & Johnson (JNJ).