Stocks showed a lack of direction during trading on Monday as traders expressed uncertainty about the situation in Europe following recent election results. The markets recovered from weakness seen in early trading but ended the day nearly flat.
The major averages eventually finished the session mixed, with the Dow posting a modest loss. While the Dow fell 29.74 points or 0.2 percent to 13,008.53, the Nasdaq edged up 1.42 points or 0.1 percent to 2,957.76 and the S&P 500 crept up by 0.48 points or less than a tenth of a percent to 1,369.58.
The modest weakness seen in early trading reflected a negative reaction to election results in France and Greece, which some saw as a setback to the progress achieved thus far on the European debt crisis.
Francois Hollande won a run-off election against French President Nicolas Sarkozy and will become France's first Socialist president since 1995.
Hollande has expressed significant opposition to using austerity measures to address the European debt crisis, arguing that the focus should be more on economic growth than cutting government spending.
Additionally, the results of Greek elections pointed to a hung parliament, with no single party getting adequate votes to form a government. Many Greek voters turned to anti-bailout parties.
Selling pressure remained relatively subdued, however, limiting the downside for the markets. Some traders subsequently looked to pick up stocks at reduced levels following the weakness seen last week.
Among individual stocks, Vertex Pharmaceuticals (VRTX) moved sharply higher after the biotech company released preliminary data showing that its cystic fibrosis combination therapy resulted in significant improvements in lung function. Shares of Vertex jumped 55.4 percent.
Shares of Tyson Foods (TSN) also moved to the upside after the meat producer reported second quarter earnings that exceeded analyst estimates but on weaker than expected revenues.
Meanwhile, Cognizant Technology (CTSH) came under pressure after the information technology services provider reported first quarter earnings growth but lowered its full-year guidance. Shares of Cognizant tumbled by 19.2 percent.
AIG (AIG) also closed in the red after the company said the Treasury has priced an offering of 163.9 million shares of its common stock at $30.50 per share.
Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance by the broader markets.
Nonetheless, considerable strength emerged among airline stocks, as reflected by the 2.3 percent gain posted by the NYSE Arca Airline Index. Strong gains by United Continental (UAL) and SkyWest (SKYW) helped to lift the index to a two-month closing high.
Biotechnology stocks also saw significant strength, resulting in a 3.4 percent gain by the NYSE Arca Biotechnology Index. While Vertex helped to lead the sector higher, Affymetrix (AFFX) and Dendreon (DNDN) also posted notable gains.
Strength was also visible among banking and housing stocks, while gold stocks came under pressure on the day amid a decrease by the price of the precious metal.
In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 2.8 percent, while Hong Kong's Hang Seng Index plummeted by 2.6 percent.
Meanwhile, the major European markets showed a notable turnaround after coming under pressure in early trading. The French CAC 40 Index surged up by 1.7 percent, while the German DAX Index crept up by 0.1 percent. The U.K. markets were closed for a holiday.
In the bond market, treasuries pulled back near the unchanged after seeing early strength, ending the day nearly flat. The yield on the benchmark ten-year note, which moves opposite of its price, closed down by less than a basis point at 1.877 percent.
Amid a lack of major U.S. economic data, trading on Tuesday could be impacted by the latest batch of earnings news.
Electronic Arts (EA) is among the companies releasing their results after the close of today's trading, while Tenet Healthcare (THC) is among the companies releasing their results before the start of trading on Tuesday.
by RTT Staff Writer
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