Strength On Wall Street Lifts Major Averages To Record Highs - U.S. Commentary

(RTTNews) - After moving higher in early trading, stocks continued to perform well throughout the trading session on Monday. With the gains on the day, all three of the major averages reached new record closing highs.

The major averages gave back some ground going into the close but still ended the day firmly in positive territory. The Dow rose 59.58 points or 0.3 percent to 18,636.05, the Nasdaq advanced 29.12 points or 0.6 percent to 5,262.02 and the S&P 500 climbed 6.10 points or 0.3 percent to 2,190.15.

The strength on Wall Street reflected the recent upward momentum for the markets, which has propelled stocks to record levels.

While news on the day was relatively light, traders have seemed willing to continue putting money in stocks amid indications that the U.S. economy is outperforming.

An increase by the price of crude oil may also have generated buying interest, with crude oil for September delivery jumping $1.25 to $45.74 a barrel.

On the U.S. economic front, the National Association of Home Builders released a report showing an improvement in homebuilder confidence in the month of August.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 60 in August from a downwardly revised 58 in July.

Economists had expected the homebuilder confidence index to inch up to 60 from the 59 originally reported for the previous month.

Meanwhile, a separate report from the New York Federal Reserve unexpectedly showed a contraction in New York manufacturing activity.

The New York Fed said its general business conditions index fell to a negative 4.21 in August from a positive 0.55 in July. A negative reading indicates a contraction in New York manufacturing activity.

The decline by the index came as a surprise to economists, who had expected the index to climb to a positive 2.50.

Sector News

Steel stocks showed a strong move to the upside, driving the NYSE Arca Steel Index up by 3.1 percent. The index regained ground after moving lower in four out of the five previous sessions.

Gerdau (GGB), Ryerson Holding (RYI), and AK Steel (AKS) turned in some of the steel sector's best performances on the day.

Significant strength was also visible among electronic storage stocks, as reflected by the 2.7 percent jump by the NYSE Arca Disk Drive Index. Datalink (DTLK) and Violin Memory (VMEM) posted standout gains.

Oil service stocks also saw considerable strength amid the increase in oil prices, while natural gas, brokerage, and biotechnology stocks also moved notably higher.

On the other hand, utilities stocks bucked the uptrend, dragging the Dow Jones Utilities Average down by 1.6 percent. With the drop, the average ended the session at its lowest closing level in well over a month.

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 fell by 0.3 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index rose by 0.2 percent and the U.K.'s FTSE 100 Index climbed by 0.4 percent.

In the bond market, treasuries gave back some ground after seeing considerable strength last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.8 basis points to 1.553 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to some key U.S. economic data, including reports on consumer prices, housing starts, and industrial production.

On the earnings front, home improvement retailer Home Depot (HD) is scheduled to release its second quarter results before the start of trading.