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Nasdaq, S&P 500 Move To The Upside But Dow Closes Modestly Lower

wallstreet4 061518 18oct21 lt

After moving notably higher last week, the major U.S. stocks indexes turned in a mixed performance during trading on Monday. The Dow edged modestly lower, while the broader Nasdaq and S&P 500 moved to the upside.

The Dow climbed well off its worst levels of the day but still ended the day down 36.15 points or 0.1 percent at 35,258.61. Meanwhile, the Nasdaq advanced 124.47 points or 0.8 percent to 15,021.81 and the S&P 500 rose 15.09 points or 0.3 percent to 4,486.46.

Stocks saw initial weakness following recent strength in the markets, which lifted the Dow and the S&P 500 to their best closing levels in a month last Friday.

Worries about the global economic outlook also weighed on the markets after data showed the Chinese economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages, supply bottlenecks, sporadic Covid-19 outbreaks and major wobbles in the property sector.

China's GDP expanded 4.9 percent year-on-year in the third quarter of 2021, the National Bureau of Statistics said, missing forecasts for 5.2 percent and down sharply from 7.9 percent in the three months prior.

An advance by Treasury yields also contributed to the initial drop, although selling pressure waned as yields pulled back well off their highs.

The pullback by treasury yields came after the Federal Reserve released a report unexpectedly showing a steep drop in industrial production in the month of September.

The Fed said industrial production tumbled by 1.3 percent in September following a revised 0.1 percent dip in August.

The sharp decline surprised economists, who had expected industrial production to edge up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.

Most of the major sectors ended the day showing only modest moves, although considerable strength was visible among housing stocks.

Reflecting the strength in the sector, the Philadelphia Housing Sector Index climbed 1.5 percent to its best closing level in over a month.

The strength among housing stocks came after a report released by the National Association of Home Builders showed a notable improvement in U.S. homebuilder confidence in the month of October.

The report said the NAHB/Wells Fargo Housing Market Index climbed to 80 in October from 76 in September. Economists had expected the index to come in unchanged.

Retail and software stocks also saw notable strength on the day, while biotechnology, airline and gold stocks moved to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index and the French CAC 40 Index slid by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries have bounced back near the unchanged line after seeing early weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 1.584 percent after reaching a high of 1.627 percent.

Looking Ahead

Earnings news may attract attention on Tuesday, with Ericsson (ERIC), Halliburton (HAL), Johnson & Johnson (JNJ), Procter & Gamble (PG), and Travelers (TRV) among the companies due to report their quarterly results before the start of trading.

The Commerce Department is also scheduled to release a report on new residential construction in the month of September.

Housing starts are expected to rise to an annual rate of 1.620 million in September from 1.615 million in August, while building permits are expected to drop to a rate of 1.680 million from 1.728 million.

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