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Dow Clings To Slim Gain But Nasdaq, S&P 500 Close Modestly Lower

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Extending the lackluster performance seen last Friday, stocks continued to experience choppy trading during Monday's session. The major averages showed a lack of direction on the day before eventually closing mixed.

While the Dow inched up 8.41 points or less than a tenth of a percent to 26,727.54, the broader Nasdaq and S&P 500 closed modestly lower. The Nasdaq dipped 26.01 points or 0.3 percent to 8,005.70 and the S&P 500 edged down 5.11 points or 0.2 percent to 2,945.35.

Traders seemed reluctant to make more significant moved ahead of the highly anticipated G20 summit in Osaka, Japan, later this week.

U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to meet during the summit in an effort to kick start stalled trade negotiations.

Reports on new home sales, consumer confidence, durable goods orders, and personal income and spending may also attract attention in the coming days.

Traders are likely to analyze the data with an eye out for any clues about the timing of an interest rate cut by the Federal Reserve.

The Fed signaled last week that the next move in interest rates would likely be lower but did not specifically outline the time frame for the reduction.

The markets are currently pricing in at least a 25 basis point rate cut at the Fed's next monetary policy meeting in late July.

Rising tensions between the U.S. and Iran also kept traders on the sidelines, with Trump announcing new sanctions on Iran after an unmanned U.S. surveillance drone was recently shot down by Iranian forces.

Trump told reporters at the White House that the U.S. does not seek conflict with Iran but said his administration will continue to increase pressure on Tehran until the regime abandons its dangerous activities.

The executive order signed by the president includes sanctions on Iran's Supreme Leader, Ayatollah Ali Khamenei, as well as the Supreme Leader's Office.

Sector News

Most of the major sectors ended the day showing only modest moves, although considerable weakness was visible among oil service stocks. The Philadelphia Oil Service Index tumbled by 2.1 percent after ending last Friday's trading at its best closing level in a month.

The pullback by oil service stocks came despite an increase by the price of crude oil, as crude for August delivery climbed $0.47 to $57.90 a barrel.

Significant weakness also emerged among biotechnology stocks, as reflected by the 1.8 percent slump by the NYSE Arca Biotechnology Index.

Transportation, tobacco, and brokerage stocks also saw notable weakness on the day, while gold stocks showed a substantial move to the upside along with the price of the precious metal.

With gold for August delivery spiking $18.10 to $1,418.20 an ounce, the NYSE Arca Gold Bugs Index surged up by 3 percent to its best closing level in well over a year.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw modest strength during trading on Monday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite 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 crept up by 0.1 percent, the French CAC 40 Index dipped by 0.1 and the German DAX Index fell by 0.5 percent.

In the bond market, treasuries rebounded following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.7 basis points to 2.021 percent.

Looking Ahead

Trading on Wednesday may be impacted by reaction to reports on new home sales and consumer confidence as well as remarks by Fed Chairman Jerome Powell.

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