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Stocks Close Mostly Lower As Traders Cash In On Recent Gains - U.S. Commentary


Stocks saw moderate weakness during trading on Monday, giving back some ground after moving sharply higher last week. Selling pressure was relatively subdued, however, and the markets held on to the bulk of their recent gains.

The major averages ended the day in negative territory but well off their lows for the session. The Dow fell 50.92 points or 0.4 percent to 13,384.29, the Nasdaq edged down 2.84 points or 0.1 percent to 3,098.81 and the S&P 500 dipped 4.58 points or 0.3 percent to 1,461.89.

The weakness on Wall Street came as traders cashed in on the recent strength in the markets, with the major averages pulling back after posting substantial gains last week on news of the fiscal cliff deal.

Last week's strong gains lifted the S&P 500 to its best closing level since late December of 2007, while the Dow ended last Friday's trading at a two-month closing high.

Uncertainty about the upcoming earnings season also weighed on investor sentiment, with aluminum giant Alcoa (AA) due to release its quarterly results after the close of trading on Tuesday. The release of Alcoa's results is seen as the unofficial start of the quarterly earnings season.

Nonetheless, trading activity was relatively subdued amid a lack of major U.S. economic data and a relatively quiet day on the corporate news front.

Among individual stocks, Citigroup (C) closed modestly higher after the financial services giant announced that it has appointed Jamie Forese and Manuel Medina-Mora as Co-Presidents.

Citigroup said Forese will be responsible for all of the company's Institutional businesses, while Medina-Mora will continue to oversee Global Consumer Banking and Citi's franchise in Mexico.

Meanwhile, drug giant Eli Lilly (LLY) posted a slim loss even though the company maintained its earnings outlook for fiscal year 2012 and forecast fiscal 2013 earnings higher than analyst estimates.

In other news, the Federal Reserve announced an $8.5 billion settlement with ten mortgage servicing companies over alleged foreclosure abuses.

The Fed said the sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments.

The agreement includes financial giants such as Citigroup, JP Morgan Chase (JPM), Bank of America (BAC) and Wells Fargo (WFC).

Sector News

Gold stocks turned in some of the market's worst performances on the day, resulting in a 1.8 percent drop by the NYSE Arca Gold Bugs Index. With the loss, the index ended the session at its lowest closing level in well over four months.

Harmony Gold (HMY) helped to lead the gold sector lower, with the gold miner falling 5.6 percent to a nearly one-month closing low.

Considerable weakness also emerged among electronic storage stocks, as reflected by the 1.5 percent loss posted by the NYSE Arca Disk Drive Index. Imation (IMN) and Quantum (QTM) posted notable losses.

Utilities, tobacco, and railroad stocks also came under pressure, while most of the other major sectors ended the day showing only modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. While Hong Kong's Hang Seng Index closed just below the unchanged line, Japan's Nikkei 225 Index fell by 0.8 percent.

The major European markets also moved to the downside on the day. The U.K.'s FTSE 100 Index dropped by 0.4 percent, while the German DAX Index and the French CAC 40 Index slid 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries closed modestly higher, regaining some ground following recent weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.2 basis points to 1.903 percent.

Looking Ahead

With traders waiting on the release of results from Alcoa and the start of the earnings season, trading activity on Tuesday may be somewhat subdued amid another quiet day on the economic front.

by RTTNews Staff Writer

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