While lingering worries about the outlook for the Federal Reserve's stimulus program generated some selling pressure in afternoon trading on Monday, stocks managed to end the day mostly higher after seeing an early rally on the heels of some upbeat economic data.
The major averages finished the session well off their best levels of the day but still posted strong gains. The Dow jumped 109.67 points or 0.7 percent to 15,179.85, the Nasdaq advanced 28.58 points or 0.8 percent to 3,452.13 and the S&P 500 climbed 12.31 points or 0.8 percent to 1,639.04.
The early strength on Wall Street came on the heels of the release of a pair of upbeat economic reports, including a report from the National Association of Home Builders showing that its reading on homebuilder confidence jumped to a seven-year high in June.
The report said the NAHB/Wells Fargo Housing Market Index soared to 52 in June from 44 in May. Economists had been expecting the index to show a much more modest increase to a reading of 45.
With the much bigger than expected increase, the index climbed above 50 for the first time since April of 2006 and reached its highest level since hitting 54 in March of 2006. A reading above 50 indicates that more builders view sales conditions as good than poor.
A separate report from the New York Federal Reserve showed that its reading on regional manufacturing rose by much more than expected in June.
The New York Fed said its general business conditions index rose to a positive 7.8 in June from a negative 1.4 in May, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to climb to a positive 0.5.
However, stocks gave back ground in afternoon trading following a report from the Financial Times predicting that the Federal Reserve will signal plans to taper its asset purchase program following the conclusion of its monetary policy meeting on Wednesday.
"Bernanke is likely to signal that the U.S. Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday, but balance that by saying subsequent moves depend on what happens to the economy," the FT's U.S. Economics Editor Robin Harding wrote.
While the Fed is not expected to announce an immediate change in policy, traders will be looking for any signals reading when the central bank will scale back its stimulus program.
Sector News
Brokerage stocks showed a strong move to the upside on the day, driving the NYSE Arca Broker/Dealer Index up by 2 percent. With the gain, the index closed just shy of the two-year closing high that it set last Monday.
E*Trade (ETFC), Nomura Holdings (NMR), and Interactive Brokers (IBKR) turned in some of the brokerage sector's best performances.
Significant strength was also visible among natural gas stocks, which moved higher along with the price of the commodity. With natural gas for July delivery climbing $0.142 to $3.875 per million BTUs, the NYSE Arca Natural Gas Index advanced by 1.9 percent.
Housing stocks also turned in a strong performance on the heels of the homebuilder confidence report, with the Philadelphia Housing Sector rising by 1.6 percent.
Oil service, semiconductor, and software stocks also saw notable strength on the day, although most stocks closed off their highs for the session.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index surged up by 2.7 percent, while Hong Kong's Hang Seng Index advanced by 1.2 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 ended the day up by 1.1 percent and 1.5 percent, respectively.
In the bond market, treasuries came under pressure amid concerns about the outlook for the Fed's stimulus program. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.5 basis points to 2.171 percent.
Looking Ahead
Reports on consumer prices and housing starts may attract some attention on Tuesday, although traders may be reluctant to make any significant moves as the Fed begins its two-day monetary policy meeting.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.