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Stocks Close Modestly Higher Following Lackluster Session - U.S. Commentary


Stocks showed a lack of direction over the course of the trading day on Monday but managed to end the day modestly higher. The slim gains on the day extended a recent upward move by the markets, with the Dow and the S&P 500 reaching new record closing highs.

The major averages all closed in positive territory but off their best levels of the day. The Dow inched up 18.82 points or 0.1 percent to 16,943.10, the Nasdaq rose 14.84 points or 0.3 percent to 4,336.24 and the S&P 500 edged up 1.83 points or 0.1 percent to 1,951.27.

The modestly higher close on Wall Street partly reflected the recent upward momentum for the markets, with the major averages extending the upward trend seen over the past month.

Positive sentiment was also generated by upbeat economic data from Japan and China, which led to optimism about the global economy.

A report from Japan's Cabinet Office showed that the nation's GDP rose 1.6 percent in the first quarter, faster than the 1.5 percent growth estimated initially.

Additionally, China's General Administration of Customs said the Chinese trade surplus widened to $35.9 billion in May amid a 7 percent year-over-year jump in exports.

Nonetheless, trading activity remained relatively subdued amid a lack of major U.S. economic data on the day.

Some key data is scheduled to be released later in the week, including reports on retail sales, producer prices, and consumer sentiment.

Among individual stocks, shares of Idenix Pharmaceuticals (IDIX) showed a substantial move to the upside after the biopharmaceutical company agreed to be acquired by drug giant Merck (MRK) for approximately $3.85 billion.

Hittite Microwave (HITT) also moved sharply higher on the day after the chipmaker agreed to be acquired by Analog Devices (ADI) for $78 per share in cash.

On the other hand, shares of Tyson Foods (TSN) came under pressure amid reports that the meat producer has won the battle to acquire Hillshire Brands (HSH) for about $63 per share in cash.

Sector News

While many of the major sectors ended the day showing only modest moves, significant strength was visible among banking stocks. The Dow Jones Banks Index advanced by 1.3 percent, reaching its best closing level in two months.

Comerica (CMA) and KeyCorp (KEY) turned in two of the banking sector's best performances, climbing by 3.6 percent and 2.6 percent, respectively.

Brokerage stocks also saw notable strength on the day, driving the NYSE Arca Broker/Dealer Index up by 1 percent. The index also reached a two-month closing high amid strong gains by FXCM Inc. (FXCM) and Piper Jaffray (PJC).

Biotechnology, defense and railroad stocks also saw some strength, while commercial real estate and utilities stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.

The major European markets also showed modest moves to the upside on the day. The U.K.'s FTSE 100 Index, the French CAC 40 Index and the German DAX Index all edged up by 0.2 percent.

In the bond market, treasuries moved modestly lower, extending a recent downward trend. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ticked up by 1.6 basis points to 2.613 percent.

Looking Ahead

The economic calendar remains relatively quiet on Tuesday, although the Commerce Department is scheduled to release its report on wholesale inventories in April.

by RTTNews Staff Writer

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