Stocks gave back ground in the latter part of the trading day on Monday but still ended the session mostly higher after seeing early strength. With the gains on the day, the markets extended the strong upward move that was seen last Friday.
The major averages showed a notable move to the downside going into the close but ended the day in positive territory. The Dow edged up 21.34 points or 0.2 percent to 13,117.51, the Nasdaq rose 22.01 points or 0.7 percent to 2,989.91 and the S&P 500 crept up 3.24 points or 0.2 percent to 1,394.23.
Despite the late day pullback, the major averages all ended the session at their highest closing levels in three months.
The strong upward move seen early in the session came as traders continued to react positively to last Friday's monthly jobs report, which showed stronger than expected job growth in the month of July.
The Labor Department said the U.S. economy added 163,000 jobs in July compared to expectations for an increase of 100,000 jobs. Despite the stronger than expected job growth for the month, the unemployment rate unexpectedly edged up to 8.3 percent in July from 8.2 percent in June.
Optimism about the financial situation in Europe also contributed to the early strength, with traders expecting the European Central Bank to take additional steps to address the ongoing debt crisis,
Buying interest was also generated by news that Greece and its international creditors have agreed on the need to strengthen policy efforts and meet the country's bailout conditions. The lenders are set to resume discussions with Greek authorities in early September.
Nonetheless, remarks by Italian Prime Minister Mario Monti helped to limit the upside for the markets, as he warned that Europe is facing the threat of a psychological disintegration and urged all leaders to become more independent from their parliaments.
In an interview with German magazine Der Spiegel that was published Sunday, Monti said the debt crisis risks the future of the single-currency bloc.
Among individual stocks, shares of Best Buy (BBY: Quote) moved sharply higher on news that the consumer electronic retailer's founder and chairman Richard Schulze offered to acquire the company for $24 to $26 per share in cash.
Schulze's offer price represents a premium of 36 percent to 47 percent to Best Buy's closing price of $17.64 on Friday. Best Buy jumped 13.3 percent on the news.
On the other hand, Knight Capital Group (KCG: Quote) came under pressure after the financial services company said it has entered into an agreement for the sale of $400 million of 2 percent convertible preferred stock in an effort to survive the huge trading loss it incurred on erroneous trades.
Steel stocks turned in some of the market's best performances on the day, benefiting from optimism about the outlook for demand. Reflecting the strength in the steel sector, the NYSE Arca Steel Index advanced by 2.6 percent to a one-month closing high.
AK Steel (AKS: Quote) and A.M. Castle (CAS: Quote) helped to lead the steel sector higher, surging up by 7.5 percent and 6.2 percent, respectively.
Considerable strength was also visible among networking stocks, as reflected by the 2.7 percent gain posted by the NYSE Arca Networking Index. Strong gains by Acme Packet (APKT: Quote) and Emulex (ELX: Quote) helped lift the index to its best closing level in a month.
Gold stocks also saw significant strength on the day, moving higher along with the price of the precious metal. With gold for December delivery climbing $6.90 to $1,616.20 an ounce, the NYSE Arca Gold Bugs Index rose by 2.5 percent.
Airline, software, and computer hardware stocks also posted notable gains, moving higher along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region saw significant strength during trading on Monday. Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang Seng Index jumped by 1.7 percent.
The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the German DAX Index and the French CAC 40 Index both advanced by 0.8 percent.
In the bond market, treasuries regained some ground after falling sharply last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.9 basis points to 1.558 percent.
With Tuesday marking another light day on the U.S. economic calendar, traders are likely to keep an eye on comments by Federal Reserve Chairman Ben Bernanke.
Bernanke is scheduled to host a town hall event with educators from across the country and will take questions after delivering prepared remarks.
Investors are likely to pay close attention to the question-and-answer portion, hoping that the Fed chief will address the state of the economy and the outlook for monetary policy.
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by RTT Staff Writer
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