RTTNews - After a sharp move to the downside in early going, stocks were able to shed most of their losses in late trading on Monday. While the Dow and S&P 500 finished modestly higher, the tech-heavy Nasdaq closed on the downside.
In an interview with RTT News, Todd Leone, managing director of equity trading at Cowen & Company called the market's turnaround Monday a minor positive.
Leone said, We've had such a tremendous move up..but people are very negative still,
Further he said any subsequent rallies from here would be justified, although he wouldn't label them bull market rallies.
On the economic front, traders largely shrugged off a report from the Institute for Supply Management showing that activity in the service sector contracted for the ninth consecutive month in June, although at a slower pace than economists had been expecting.
The ISM said its index of activity in the service sector rose to 47.0 in June from 44.0 in May, but a reading below 50 indicates a contraction. Economists had been expecting the index to come in at 46.0.
On the corporate front, food and beverage giant PepsiCo Inc. (PEP), together with its bottling partner Pepsi Bottling Group Inc. (PBG), announced plans to invest $1 billion in Russia over three years.
Meanwhile, EMC (EMC) raised its all-cash offer to acquire Data Domain (DDUP) to $33.50 per share for a total enterprise value of about $2.1 billion. EMC is competing with NetApp (NTAP) to acquire Data Domain.
Despite the major indices all moving higher going into the close, the Nasdaq was unable to break into positive territory. Subsequently, the Nasdaq finished down by 9.12 points or 0.5 percent at 1,787.40, while the Dow closed up by 44.13 points or 0.5 percent at 8,324.87 and the S&P 500 rose by 2.30 or 0.3 percent to 898.72.
Real estate stocks turned in some of the day's strongest performances, with the Morgan Stanley Real Estate Index rising by 3.5 percent on the day. Despite the strong gain, the index remains stuck in roughly a three-week trading range.
Further, tobacco and airline stocks posted notable gains, as reflected by a 2.5 percent climb by the NYSE Arca Tobacco Index and a 1.1 percent gain by the NYSE Arca Airline Index.
Chemical stocks also saw a move to the upside, with the S&P Chemical Index rising by 1.2 percent. The day's gains helped to lift the index away from a two-month closing low set in the previous session.
Meanwhile, resource stocks saw significant losses on the day, with gold and steel stocks retreating by comparable margins. The NYSE Arca Gold Bugs Index and the NYSE Arca Steel Index fell by 4 percent and 3.8 percent, respectively. The decline in the steel index took it to its worst closing level in seven weeks.
Oil and natural gas stocks also fell, with a 1.5 percent loss posted by the NYSE Arca Oil Index and a 1.6 percent retreat posted by the NYSE Arca Natural Gas Index
The move came as commodity prices took a hit, with the price of oil finishing just above $64 per barrel, setting a five-week low.
Most of the Dow components finished in positive territory, contributing to the modest gain posted by the blue chip index.
American Express (AXP) was one of the Dow's strongest performers, rising by 5.6 percent on the session. The day's climb helped to lift the stock away from its worst closing price in over two months set last Thursday.
Merck (MRK), DuPont (DD) and Procter & Gamble (PG) rose by considerable margins, offsetting the majority of last week's losses. Travelers (TRV) and United Technologies (UTX) also jumped, moving off of one-month and two-month closing lows, respectively.
On the other hand, Alcoa (AA) post a steep loss, with shares of the aluminum producer declining by 6.1 percent, finishing at their worst price in just over a month.
Bank of America (BAC) also struggled, moving lower by 3.8 percent on the day. The move came as the firm revealed that it expects its write-offs for bad loans to rise by 10 percent in the second quarter. Despite the pullback, the stock remained in roughly a three-week trading range.
Intel (INTC) and Microsoft (MSFT) also closed in the red, with the tech giants giving back some of their recent gains. Intel continued to pull back off of a nine-month closing high set last Wednesday.
In overseas trading, stock markets across the Asia-Pacific region ended Monday's session mostly lower. Japan's benchmark Nikkei 225 Index closed down by 1.4 percent, while Hong Kong's Hang Seng Index slipped by 1.2 percent.
The major European markets also saw notable weakness on the day, with the German DAX Index and French CAC 40 Index both finishing down 1.2 percent. The U.K.'s FTSE 100 Index also fell, posting a loss of 1 percent for the day.
In the bond markets, treasuries finished little changed amid a light trading day in the broader markets. Subsequently, the yield on the ten-year note closed at 3.506 percent, a climb of 1.1 basis points.
With no first tier economic data on tap for Tuesday, traders may focus on the Treasury Department's $35.0 billion auction of three-year notes amid interest rate concerns in the broader markets. Equity markets may see some profit taking ahead of key economic data and the start of earnings season later this week, with resource based giants Alcoa and Chevron (CVX) set to report.
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