Stocks turned in a relatively lackluster performance during trading on Monday, eventually ending the session mostly lower. The choppy trading came as traders expressed uncertainty about the near-term outlook for the markets following recent strength.
After coming under pressure in morning trading, the major averages rebounded in the afternoon, finishing the day mixed. While the Nasdaq edged up 1.66 points or 0.1 percent to 3,022.52, the Dow fell 38.52 points or 0.3 percent to 13,169.43 and the S&P 500 dipped 1.76 points or 0.1 percent to 1,404.11.
The weakness seen in morning trading came as some traders cashed in on the recent strength in the markets, which lifted the major averages to three-month highs.
Disappointing Japanese economic data also contributed to the pullback by stocks, with a report from Japan's Cabinet Office showing weaker than expected Japanese economic growth in the second quarter.
The report showed that Japanese GDP rose by 0.3 percent sequentially in the second quarter. The increase was tame compared to the 0.6 percent growth expected by economists. Annually, GDP rose 1.4 percent, while economists had expected a sharper 2.5 percent increase.
While the report added to recent concerns about the outlook for the global economy, the data also hints at the possibility of further monetary stimulus.
David Rea, Japan Economist at Capital Economics, said, "Fiscal policy is in no shape to provide additional stimulus, increasing the pressure on the Bank of Japan to further augment its asset purchase program."
"We expect the Bank will extend the program again at least once more this year, probably in October when it publishes its semi-annual report on economic activity and prices," he added.
Even though a majority of stocks ended the day in the red, Sysco (SYY: Quote) turned in a strong performance after the food distributor reported better than expected fourth quarter earnings. Shares of Sysco advanced by 4.5 percent
While most of the major sectors ended the session showing only modest moves, considerable weakness was visible among steel stocks. The NYSE Arca Steel Index fell by 1.4 percent after ending the previous session at a nearly three-month closing high.
Schnitzer Steel (SCHN: Quote) turned in one of the steel sector's worst performances, falling by 7.7 percent after Bank of America downgraded its rating on the stock to Underperform from Neutral.
Gold stocks also came under pressure over the course of the session, moving lower along with the price of the precious metal. With gold for December delivery sliding $10.20 to $1,612.60 an ounce, the NYSE Arca Gold Bugs Index dropped by 1.3 percent.
Natural gas, oil service, and health insurance stocks also saw notable weakness on the day, while modest strength was visible among airline stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday. While Japan's Nikkei 225 Index edged down by 0.1 percent, Australia's All Ordinaries Index crept up by 0.2 percent.
Meanwhile, the major European markets all moved to the downside on the day. The German DAX Index fell by 0.5 percent, while the U.K.'s FTSE 100 Index and the French CAC 40 Index both ended the day down by 0.3 percent.
In the bond market, treasuries pulled back near the unchanged line in late-day trading after seeing modest strength in the morning. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by less than a basis point to 1.654 percent.
Trading on Tuesday is likely to be impacted by the release of the Commerce Department's report on retail sales, which is expected to show a rebound in sales in the month of July.
The retail sales report could have a significant impact on the economic outlook, as consumer spending accounts for about two-thirds of U.S. economic activity.
Reports on wholesale price inflation and business inventories may also attract some attention along with the release of quarterly results from Home Depot (HD: Quote).
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by RTT Staff Writer
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