Stocks saw significant strength during trading on Monday, regaining some ground after showing a notable move to the downside in recent weeks. The markets benefited from bargain hunting but remain sharply lower for the month of May.
The major averages saw further upside going into the close, ending the session just off their highs. The Dow rose 135.10 points or 1.1 percent to 12,504.48, the Nasdaq jumped 68.42 points or 2.5 percent to 2,847.21 and the S&P 500 climbed 20.77 points or 1.6 percent to 1,315.99.
The rebound on Wall Street came as traders picked up stocks at reduced levels following the recent downward trend, which pulled the major averages down to four-month closing lows on Friday.
With the gain on the day, the Dow ended a six-session losing streak, although it still marked just the second gain for the index in fourteen sessions.
Trading activity was somewhat subdued, as lingering concerns about Europe and a lack of major U.S. economic data kept some traders on the sidelines.
While reports on home sales, durable goods orders, and consumer sentiment are likely to be in focus later this week along with earnings news from Hewlett-Packard (HPQ), Dell (DELL), and Best Buy (BBY), trading activity may remain light.
With earnings season drawing to a close, some traders may take the opportunity to step away from the markets and go on an early summer vacation.
Among individual stocks, American Eagle Outfitters (AEO) posted a strong gain after the apparel retailer announced plans to exit its children's business 77kids. The company also said its chief financial officer Joan Hilson is stepping down.
Shares of Yahoo (YHOO) also ended the day higher after the online media giant announced that it is selling up to half of its stake in Alibaba back to the Chinese e-commerce company for about $7.1 billion.
Meanwhile, Lowe's (LOW) posted a steep loss after the home improvement retailer reported better than expected first quarter results but lowered its full year earnings guidance.
Shares of Facebook (FB) also came under pressure, with the social media giant tumbling by 11 percent following its glitch-plagued debut on Friday.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index crept up by 0.3 percent, while Hong Kong's Hang Seng Index ended the day down by 0.2 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index advanced by 1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.7 percent and 0.6 percent, respectively.
In the bond market, treasuries saw modest weakness after rising sharply in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.3 basis points to 1.735 percent.
Most of the major sectors showed notable upward moves on the day, reflecting broad based buying interest in the markets following the recent weakness.
Oil service stocks posted particularly strong gains, benefiting from a rebound by the price of crude oil. With crude for June delivery climbing $1.09 to $92.57 a barrel after ending Friday's trading at a six-month low, the Philadelphia Oil Service Index surged up by 3.9 percent.
Significant strength was also visible among steel stocks, as reflected by the 4 percent gain posted by the NYSE Arca Steel Index. The gain by the index came after it ended the previous session at a seven-month closing low.
Gold stocks also saw considerable strength, driving the NYSE Arca Gold Bugs Index up by 3.4 percent. Chemical, biotechnology, housing, and computer hardware stocks also posted standout gains.
Trading on Tuesday could be impacted by the release of the National Association of Realtor's monthly report on existing home sales. Economists expect existing home sales to climb to an annual rate of 4.66 million in April from 4.48 million in March.
On the earnings front, Best Buy, Autozone (AZO), Medtronic (MDT), and Ralph Lauren (RL) are among the companies scheduled to release their quarterly results before the start of trading on Tuesday.
by RTT Staff Writer
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