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Stocks Close Sharply Higher On Upbeat News From China, Syria - U.S. Commentary


Stocks moved sharply higher over the course of the trading day on Monday, extending the upward move that was seen last week. The markets benefited from upbeat Chinese data as well as the latest developments regarding the situation in Syria.

The major averages moved roughly sideways going into the close, holding on to strong gains. The Dow jumped 140.62 points or 0.9 percent to 15,062.12, the Nasdaq soared 46.17 points or 1.3 percent to 3,706.18 and the S&P 500 surged up 16.54 points or 1 percent to 1,671.71.

With the gain on the day, the tech-heavy Nasdaq closed higher for the fifth consecutive session, reaching its best closing level in almost thirteen years.

The rally on Wall Street was partly in reaction to positive economic news out of China, which helped trigger a notable advance by stocks across the Asia-Pacific region.

A report released by the Chinese National Bureau of Statistics showed that Chinese annual consumer price inflation eased to 2.6 percent in August from 2.7 percent in July. Producer prices fell 1.6 percent year-over-year.

Additionally, a separate report from Chinese Customs showed that annual export growth picked up to 7.2 percent in August from 5.1 percent in July.

Chinese imports grew at a slower pace of 7 percent after rising by 10.9 percent in July, helping to push the Chinese trade surplus up to $28.6 billion in August from $17.8 billion in July.

"Today's inflation data added no additional pressure for monetary tightening while the weekend's export data provided further evidence of a revival in foreign demand," Capital Economics said in a research note.

Buying interest was also generated by news that Syria is considering a Russian proposal to give up its chemical weapons in order to avoid an attack by the U.S.

After a meeting with his Russian counterpart, Syrian Foreign Minister Walid Moallem told reporters that Syria "welcomes" the Russian initiative but stopped short of saying that the government had actually accepted the proposal.

In corporate news, shares of Molex (MOLX), moved sharply higher after the electronic components company agreed to be acquired by Koch Industries for approximately $7.2 billion.

The deal values Molex at $38.50 per share, representing a 31 percent premium to its closing price on Friday. Shares of Molex jumped 31.7 percent on the news.

Sector News

While most of the major sectors moved to the upside on the day, housing stocks posted particularly strong gains. The Philadelphia Housing Sector Index surged up by 3.9 percent to its best closing level in a month.

PulteGroup (PHM) and D.R. Horton (DHI) turned in two of the housing sector's best performances, jumping by 7.5 percent and 6.5 percent, respectively.

Significant strength was also visible among airline stocks, as reflected by the 3.5 percent gain posted by the NYSE Arca Airline Index. Delta (DAL) helped lead the sector higher on news that it will replace BMC Software (BMC) in the S&P 500 after the close of trading on Tuesday.

With the Chinese data generating optimism about the outlook for demand, steel stocks also turned in a strong performance on the day. The NYSE Arca Steel Index advanced by 2.7 percent, reaching a nearly six-month closing high.

Electronic storage, biotechnology, commercial real estate, and networking stocks also saw considerable strength, reflecting the broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Monday. Japan's Nikkei 225 Index surged up by 2.5 percent, while Hong Kong's Hang Seng Index advanced by 0.6 percent.

Meanwhile, the major European markets ended the day mixed. While the German DAX Index closed just above the unchanged line, the French CAC 40 Index and the U.K.'s FTSE 100 Index dipped by 0.2 percent and 0.3 percent, respectively.

In the bond market, treasuries closed moderately higher, climbing further off their recent lows. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.897 percent.

Looking Ahead

Amid another quiet day on the U.S. economic front, trading on Tuesday could be impacted by any developments regarding the situation in Syria.

by RTTNews Staff Writer

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