Stocks Close Little Changed Following Choppy Trading Session - U.S. Commentary

This morning, traders reacted to comments from a number of central bankers over the weekend at the Federal Reserve conference in Jackson Hole, Wyoming, indicating that interest rates are likely to remain fixed for some time despite some signs of economic stabilization.

At the conference, Federal Reserve Chairman Ben Bernanke said, Economic activity appears to be leveling out, both in the United States and abroad. Bernanke also noted that the prospects for a return to growth in the near term appear good.

However, the optimism was partly offset by comments from economist Nouriel Roubini, who said that he sees a big risk of a double recession in an article for the Financial Times.

Roubini, who predicted the magnitude of the recent financial crisis, stated that the global economy might bottom out in the second half of the year and that the economies in the U.S and other European countries might witness anemic or below trend growth for at least a couple of years.

The pullback by the markets was also partly due to comments from Sun Trust (SIT) CEO James Wells, who said that financial institutions are likely to incur further losses amid the dismal condition of the commercial real estate market.

In other news, conflicting reports have led to speculation over the health of Bernard Ma doff, perpetrator of the largest pons scheme in history, who may be dying of cancer at a federal prison in North Carolina. However, prison officials have refuted the cancer claim that a number of media outlets reported earlier.

The major averages saw choppy movement in late session dealing, resulting in a mixed close to kick off the week. While the Dow closed up by 3.32 points or less than a tenth of a percent at 9,509.28, the Nasdaq slipped by 2.92 points or 0.1 percent to 2,017.98 and the S&P 500 fell by 0.56 or 0.1 percent to 1,025.57.

Sector News

Banking stocks helped to lead the way back to the downside after seeing significant strength early on. The KB Bank Index eventually ended the session down 1.6 percent after reaching an eight-month intraday high in early trading.

The index was dragged down by shares of Synods (NV), which fell by 5.2 percent on the session. With the loss, Synods pulled back further off the three-month closing high set earlier this month.

Further, retail and gold stocks also came under pressure, although they largely remained in a recent range. Losses by railroad stocks dragged the Dow Jones Railroads Index down by 1 percent, backing off of the ten-month closing high set on Friday.

Meanwhile, tobacco stocks were largely able to hold onto strong gains, with the NYSE Arca Tobacco Index posting a gain of 1.7 percent on the day. With the gain, the index was able to close at its best level in nearly eleven months.

Oil service and steel stocks were also able to close on the upside, with the Philadelphia Oil Service Index and the NYSE Arca Steel Index recording gains of 1 percent and 0.9 percent, respectively. The oil service index finished at its best closing level in over two months, while the steel index remained stuck in a recent range.

Dow Components

While the Dow components ended the session roughly mixed, notable strength among some of the blue chip stocks contributed to the modest gain by the index.

Shares of Boeing (BA) showed a strong upward move, posting a gain of 2.8 percent on the day. The day's gain lifted the stock to its best closing level in two months.

Oil giant Chevron (CV) also rose, climbing by 1.5 percent on the session, benefiting from an increase by the price of oil. The advance helped the stock to finish at its best level in just over two months.

Exxon Mobil (COM) and United Technologies (TUX) also posted notable gains, rising by 2 and 1 percent, respectively. Exxon closed at its best level in nearly a month, while United Technologies closed at a nearly eleven-month high.

On the other hand, Home Depot (HUD) and Coca-Cola (KO) helped to pull the Dow well off its highs, with both stocks closing down by 1.7 percent. Home Depot remained in a range, while Coca-Cola pulled back off the one-month closing high set on Friday.

Shares of JP Morgan Chase (JPN) and Kraft Foods (FT) also moved notably lower, slipping by 1.5 percent and 1.4 percent, respectively. JP Morgan pulled back off its best closing price in nearly eleven months, while Kraft backed off of last week's seven-month high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed notably higher on Monday. Japan's benchmark Nikkei 225 Index surged up by 3.4 percent, while Hong Kong's Hang Seng Index rose by 1.7 percent.

The major European markets also saw strong gains, with the German DAX Index and the U.K.'s FTSE 100 Index both rising by 0.8 percent, while the French CAC 40 Index gained 1 percent.

In the bond markets, treasuries moved higher over the course of the trading day, benefiting from the pullback on Wall Street. The yield on the benchmark ten-year note closed at 3.494 percent, posting a loss of 6.2 basis points on the day.

Looking Ahead

Looking ahead to Tuesday, traders will likely focus on the Conference Board's report on consumer confidence in August as well as the S&P Case-Chiller Home Prices Index for June. A two-year note auction may also attract some attention amid continued concern over interest rates.

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