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Major Averages Climb To Two-Month Closing Highs - U.S. Commentary


After turning in a lackluster performance early in the session, stocks moved mostly higher over the course of the trading day on Monday. With the upward move, the major averages reached their best closing levels in two months.

The major averages saw further upside going into the close, reaching new highs for the session. The Dow climbed 175.48 points or 1.7 percent to 25,239.37, the Nasdaq jumped 83.67 points or 1.2 percent to 7,347.54 and the S&P 500 advanced 18.34 points or 0.7 percent to 2,724.87.

Technology stocks helped to lead the way higher on Wall Street, contributing to the significant gain posted by the tech-heavy Nasdaq.

The markets continued to benefit from recent upward momentum as well as the positive sentiment generated by last Friday's monthly employment report showing much stronger than expected job growth in the month of January.

Trading activity was somewhat subdued, however, as traders expressed uncertainty about the near-term outlook for the markets on the heels of the upward trend seen in recent weeks.

Uncertainty about trade talks between the U.S. and China also kept some traders on the sidelines along with the potential for another government shutdown amid an ongoing impasse over President Donald Trump's border wall.

The economic calendar for the week is also relatively light, although traders are likely to keep an eye on reports on service sector activity, international trade, and labor productivity and costs.

While the Commerce Department released a report showing an unexpected drop in factory orders in the month of November, the delayed data was likely seen as old news.

Sector News

Software stocks moved sharply higher over the course of the trading session, driving the Dow Jones Software Index up by 2.3 percent to its best closing level in two months.

Ultimate Software (ULTI) posted a standout gain after the human resources software maker agreed to be acquired by an investor group led by private equity firm Hellman & Friedman for $331.50 per share or approximately $11 billion in cash.

Significant strength also emerged among computer hardware stocks, with the NYSE Arca Computer Hardware Index climbing by 1.6 percent to a two-month closing high.

Tobacco, oil service, and retail stocks also saw notable strength on the day, while some weakness was visible among housing stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.2 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries extended the significant pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.3 basis points to 2.724 percent.

Looking Ahead

Earnings news is likely to be in focus on Tuesday, with Google parent Alphabet (GOOGL) among the companies releasing their quarterly results after the close of today's trading.

Trading may also be impacted by reaction to the Institute for Supply Management's report on service sector activity in January.

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