Stocks Close Higher Following Income & Spending Data - U.S. Commentary

(RTTNews) - On the heels of the weakness seen over the course of the previous week, stocks moved mostly higher during trading on Monday. Buying interest was somewhat subdued, however, limiting the upside for the markets.

The major averages finished the day in positive territory but off their best levels. The Dow advanced 107.59 points or 0.6 percent to 18,502.99, the Nasdaq rose 13.41 points or 0.3 percent to 5,232.33 and the S&P 500 climbed 11.34 points or 0.5 percent to 2,180.38.

The strength on Wall Street came following the release of a report from the Commerce Department showing that income and spending rose in line with economist estimates in the month of July.

The report said personal income climbed by 0.4 percent in July after rising by 0.3 percent in June. The increase in income matched economist estimates.

The Commerce Department also said personal spending rose by 0.3 percent in July following a 0.5 percent increase in June. The spending growth also met expectations.

A closely watched reading on inflation showed that core consumer prices, which exclude food and energy prices, were up 1.6 percent year-over-year in July, unchanged from the previous month.

"That lack of acceleration in core inflation is a factor that could persuade Fed officials to delay the next interest rate hike until December," said Steve Murphy, U.S. economist at Capital Economics.

Nonetheless, traders seemed somewhat reluctant to make more significant moves ahead of the release of the monthly jobs report on Friday.

The report is expected to show an increase of about 175,000 jobs in August after a jump of 255,000 jobs in July. The unemployment rate is expected to edge down to 4.8 percent from 4.9 percent.

The strength of the employment report could have a significant impact on the interest rate outlook going into the next Federal Reserve meeting in September.

In a highly anticipated speech last Friday, Fed Chair Janet Yellen said she believes the case for raising interest rates has strengthened in recent months.

Sector News

Steel stocks showed a strong move to the upside on the day, driving the NYSE Arca Steel Index up by 2.2 percent. The gain by the index came after it ended the previous session at its lowest closing level in over a month.

Within the steel sector, Allegheny Technologies (ATI) posted a standout gain after Deutsche Bank upgraded its rating on the company's stock to Buy from Hold.

Considerable strength was also visible among banking stocks, as reflected by the 1 percent gain being posted by the Dow Jones Banks Index. With the gain, the index reached its best intraday level in well over seven months.

Commercial real estate, chemical, and gold stocks also saw some strength on the day, while most of the other major sectors showed more modest moves.

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 2.3 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets moved to the downside on the day. The German DAX Index and the French CAC 40 Index both dropped by 0.4 percent. The U.K. markets were closed for a holiday.