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Stocks Close Modestly Lower But Well Off Worst Levels - U.S. Commentary


Stocks saw modest weakness throughout much of the trading session on Monday, but the major averages ended the day well off their worst levels.

The major averages finished the session just below the unchanged line. The Dow slipped 26.53 points or 0.1 percent to 26,384.77, the Nasdaq dipped 8.15 points or 0.1 percent to 7,976.01 and the S&P 500 edged down 1.83 points or 0.1 percent to 2,905.58.

The modest weakness on Wall Street partly reflected a negative reaction to earnings news from Goldman Sachs (GS), with the financial giant slumping by 3.8 percent.

The drop by Goldman Sachs comes after the company reported better than expected first quarter earnings but revenues that missed expectations.

Shares of Citigroup (C) also closed just below the unchanged line even though the company reported first quarter earnings that exceeded analyst estimates.

Nonetheless, traders seemed reluctant to make more significant moves ahead of the release of quarterly results from a slew of other big-name companies in the coming days.

Bank of America (BAC), Johnson & Johnson (JNJ), IBM (IBM), Morgan Stanley (MS), PepsiCo (PEP), and American Express (AXP) are among the companies due to report their results this week.

The impending release of data on industrial production, retail sales, and housing starts also kept some traders on the sidelines along with the holiday on Friday.

In economic news, the New York Federal Reserve released a report showing growth in regional manufacturing activity picked up somewhat in April but remained fairly subdued.

The New York Fed said its headline general business conditions index climbed to 10.1 in April after falling to 3.7 in March, with a positive reading indicating growth in regional manufacturing activity.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Banking, energy, and transportation stocks saw some weakness, however, contributing to the modestly lower close by the major averages.

On the other hand, significant strength was visible among computer hardware stocks, with the NYSE Arca Computer Hardware Index surging up by 2.8 percent to a six-month high.

Digital imaging company Electronics For Imaging (EFII) soared by 29.2 percent after agreeing to be acquired by an affiliate of Siris Capital in an all-cash transaction valued at approximately $1.7 billion.

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 surged up by 1.3 percent, while Hong Kong's hang Seng Index fell by 0.3 percent.

Meanwhile, European stocks saw modest strength on the day, although the U.K.'s FTSE 100 Index closed just below the unchanged line. The German DAX Index and the French CAC 40 Index edged up by 0.2 percent and 0.1 percent, respectively.

In the bond market, treasuries closed roughly flat after moving notably lower over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.553 percent.

Looking Ahead

Earnings news is likely to remain in focus on Tuesday, with Bank of America (BAC), Johnson & Johnson (JNJ) and UnitedHealth (UNH) among the companies due to report their quarterly results before the start of trading.

Traders are also likely to keep an eye on a pair of U.S. economic reports on industrial production and homebuilder confidence.

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