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Stocks Close Mixed Following Lackluster Trading Day - U.S. Commentary

Stocks turned in a mixed performance on Monday following the release of a mixed batch of U.S. economic data. Uncertainty about the outlook for corporate earnings also impacted trading along with renewed concerns about the European debt crisis.

While the Dow managed to remain positive throughout the session, the Nasdaq and the S&P 500 closed in the red. The Dow rose by 71.82 points or 0.6 percent to 12,921.41, while the Nasdaq fell 22.93 points or 0.8 percent to 2,988.40 and the S&P 500 edged down 0.69 points or 0.1 percent to 1,369.57.

Initial buying interest was generated by the release of a report from the Commerce Department showing much stronger than expected retail sales growth in the month of March.

The report showed that retail sales rose by 0.8 percent in March following a revised 1.0 percent increase in February. Economists had been expecting retail sales to increase by a much more modest 0.3 percent.

Excluding a 0.9 percent increase in auto sales, retail sales still rose by 0.8 percent in March compared to a 0.9 percent increase in the previous month.

However, disappointing New York manufacturing data helped to offset the positive sentiment, with a report from the New York Federal Reserve showing that its index of regional manufacturing fell by much more than anticipated in the month of April.

The New York Fed said its general business conditions index plunged to 6.6 in April from 20.2 in March, although a positive reading indicates an increase in manufacturing activity. The index had been expected to edge down to 18.0.

Separately, the National Association of Home Builders reported an unexpected deterioration in homebuilder confidence in the month of April, with the decrease marking the first drop in seven months.

The report showed that the NAHB/Wells Fargo Housing Market Index dropped to 25 in April from 28 in March. The decrease surprised economists, who had expected the index to edge up to 29.

Notable losses by Apple (AAPL) and Google (GOOG) contributed to the pullback by the Nasdaq, with the tech heavyweights falling by 4.2 percent and 3 percent, respectively.

Meanwhile, shares of Citigroup (C) ended the day up by 1.8 percent after the financial giant released its first quarter results before the start of trading.

While Citigroup reported net income that fell to $0.95 per share from $0.99 per share in the same quarter a year ago, the company's adjusted earnings rose to $1.11 per share.

Sector News

While many of the major sectors showed relatively modest moves, considerable strength was visible among commercial real estate stocks. The Morgan Stanley REIT Index advanced by 1.6 percent amid strong gains by Corporate Office Properties Trust (OFC) and Cousins Properties (CUZ).

Trucking stocks also showed a strong move to the upside on the day, driving the Dow Jones Trucking Index up by 1.3 percent. YRC Worldwide (YRCW) helped to lead the trucking sector higher, surging up by 13.4 percent.

Utilities, pharmaceutical, and banking stocks also saw considerable strength, with Citigroup turning in one of the banking sector's best performances after reporting its first quarter results.

Meanwhile, oil service stocks saw significant weakness on the day, resulting in a 1.8 percent drop by the Philadelphia Oil Service Index. The weakness in the oil service came even though the price of crude oil ended the day modestly higher.

Gold, health insurance, and internet stocks also posted notable losses, with gold stocks moving lower along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. Japan's Nikkei 225 Index tumbled by 1.7 percent, while Hong Kong's Hang Seng Index ended the day down by 0.4 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the French CAC 40 Index and the German DAX Index advanced by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries moved to the upside on the day but closed well off their best levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.4 basis points to 1.974 percent.

Looking Ahead

Earnings news is likely to be in focus on Tuesday, as Goldman Sachs (GS), Johnson & Johnson (JNJ), and Coca-Cola (KO) are among the companies scheduled to report their quarterly results before the start of trading.

Economic data may also attract some attention, with traders likely to keep an eye on reports on housing starts and industrial production.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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