After seeing considerable weakness in morning trading on Monday, stocks staged a notable recovery attempt over the course of the afternoon. The major averages moved well off their worst levels of the day, eventually ending the session mixed.
While the Nasdaq and the S&P 500 managed to finish the day above the unchanged line, the Dow closed down about 25 points. Nonetheless, the Dow was well off its low for the session, when it was down nearly 120 points.
The early weakness came as traders cashed in on recent gains amid some uncertainty about the impending earnings season, with financial giants Citigroup (C), JP Morgan (JPM), and Goldman Sachs (GS) among the companies that are due to release their quarterly results this week.
Boeing (BA) contributed to the anxiety about the outlook for earnings, with the aerospace giant saying that its first quarter earnings would be negatively impacted by decisions to reduce airplane production as well as unfavorable price escalation.
Some selling pressure was also generated by a report from the New York Times that said the Treasury Department is directing General Motors (GM) to prepare for a bankruptcy filing by a June 1st deadline.
The report specified that one plan under consideration would create a new company that would buy the good assets of the company almost immediately after the carmaker files for bankruptcy.
Nonetheless, the late day recovery was due in part to news that the Obama administration plans to ease certain restrictions on transactions with Cuba, including allowing U.S. telecom companies to apply for licenses in the island nation.
Some buying interest was also generated by an announcement that President Barack Obama will deliver a major speech on the economy at Georgetown University on Tuesday.
The White House said that the president would discuss how each step his administration has taken to confront this economic crisis fits within his broader vision of how we move this economy from recession to recovery and ultimately to prosperity.
Earlier in the day, President Obama marked the 2,000th transportation project to be approved under the $787 billion economic relief package.
The government effort is coming in ahead of schedule and under budget, Obama announced, praising the efforts of Transportation Secretary Ray LaHood and Vice President Joe Biden.
Just 41 days ago we announced funding for the first transportation project under ARRA and today we're approving the 2,000th project, Obama said. I am proud to utter the two rarest phrases in the English language - projects are being approved ahead of schedule, and they are coming in under budget.
While the major averages all moved into positive territory in late day trading, the Dow slipped back into the red going into the close. The Dow closed down 25.57 points or 0.3 percent at 8,057.81, while the Nasdaq closed up 0.77 points or 0.1 percent at 1,653.31 and the S&P 500 closed up 2.17 points or 0.3 percent at 858.73.
Overseas, while several of the major markets in the Asia-Pacific region remained closed for Easter Monday, most of the markets in the region that were open closed higher. The major European markets were all closed for the Easter Monday holiday.
In the bond market, treasuries saw considerable strength, moving back to the upside after coming under pressure last Thursday. Subsequently, the yield on the benchmark 10-year note ended the session down 8.1 basis points at 2.845 percent.
The late day recovery was led by banking stocks, which added to the substantial gains posted in the previous session. The strength in the sector is reflected the 7.9 percent gain posted by the Kbw Bank Index, which ended the session at a three-month closing high.
Brokerage and steel stocks also experienced considerable buying interest, with the Amex Securities Broker/Dealer Index and the Amex Steel Index finishing with gains of 5.6 percent and 3.5 percent, respectively.
Additionally, gold stocks saw noteworthy strength, driving the Amex Gold Bugs Index up 2.4 percent on the day amid strength in the price of the precious metal. The price of gold ended the session up $12.50 at $895.80 an ounce.
Strength that emerged in the health insurance, healthcare provider and airline sectors also contributed to the recovery by the broader markets.
At the same time, some weakness remained visible in the computer hardware sector, as reflected by the 1.8 percent loss posted by the Amex Computer Hardware Index. Electronic storage stocks turned in some of the sector's worst performances.
Notable weakness among utilities, semiconductor, and transportation stocks also helped to limit the upside for the markets.
A slim majority of the Dow components ended the day in negative territory, contributing to the modest loss posted by the blue chip index. A particularly steep loss by General Motors (GM) played a big part in the lower close by the Dow.
Pulling back further off their recent highs, shares of GM ended the session down 16.2 percent amid continued concerns about a bankruptcy filing by the auto giant. With the loss, GM ended the session at its worst closing level in over a month.
Boeing also posted a notable loss following its first quarter earnings warning, closing down 5.1 percent. Exxon Mobil (XOM), Procter & Gamble (PG), and United Technologies (UTX) also finished the day firmly in the red.
Meanwhile, Citigroup and Bank of America (BAC) showed strong upward moves, reflecting the considerable strength in the banking sector. Shares of Citigroup closed up 25 percent, while shares of Bank of America closed up 15.4 percent.
Strong gains by American Express (AXP) and General Electric (GE) also helped to lift the Dow well off its worst level of the day.
Retail sales data highlights the economic calendar on Tuesday, with the report scheduled to be released at 8:30 a.m. ET. Economists expect the report to show that retail sales rose 0.3 percent in March.
At the same time, producer production data for March will also be made public. At 10 a.m. ET, business inventories data for February is set for release.
Trading on Tuesday is also likely to be impacted by reaction to the release of quarterly results from Goldman Sachs after the close of trading today.
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