Stocks Close Lackluster Trading Day Slightly Higher - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout the trading day on Monday as trader weighed worries about the deteriorating security situation in Iraq against a batch of upbeat U.S. economic data. The choppy trading came on the heels of the pullback seen last week.

The major averages bounced back and forth across the unchanged line before closing slightly higher. The Dow ticked up 5.27 points or less than a tenth of a percent to 16,781.01, the Nasdaq edged up 10.45 points or 0.2 percent to 4,321.11 and the S&P 500 inched up 1.62 points or 0.1 percent to 1,937.78.

The modest strength seen at the close of trading partly reflected a positive reaction to better than expected readings on New York manufacturing activity, industrial production, and homebuilder confidence.

Before the start of trading, the New York Federal Reserve said its general business conditions index inched up to 19.3 in June from 19.0 in May, with a positive reading indicating growth in regional manufacturing activity.

The modest uptick came as a surprise to economists, who had been expecting the index to drop to a reading of 15.0.

The Federal Reserve released a separate report showing that industrial production increased by 0.6 percent in May following a revised 0.3 percent decrease in April. Economists had expected production to climb by about 0.5 percent.

Additionally, the National Association of Home Builders released a report showing that homebuilder confidence has improved by more than expected in the month of June.

The report showed that the NAHB/Wells Fargo Housing Market Index climbed to 49 in June from 45 in May. Economists had expected the index to edge up to 47.

The better than expected economic data helped to overshadow continued concerns about the Sunni insurgency taking place across Iraq.

Reflecting the seriousness of the situation, Secretary of State John Kerry suggested that the U.S. would be willing to work with long-time rival Iran to address the escalating violence.

On Friday, President Barack Obama stated that he will not send U.S. troops back into combat in Iraq but said his national security team is preparing a range of other options.

The lackluster performance on Wall Street also reflected traders staying on the sidelines ahead of the Fed's monetary policy announcement on Wednesday.

Sector News

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

Electronic storage stocks saw significant strength, however, with the NYSE Arca Disk Drive Index surging up by 4 percent. With the gain the index ended the session at its best closing level in almost two months.

SanDisk (SNDK) helped lead the storage sector higher, surging up by 3.6 percent after agreeing to acquire Fusion-io (FIO) for about $1.1 billion.

Considerable strength was also visible among utilities stocks, as reflected by the 1.8 percent gain posted by the Dow Jones Utilities Average. Williams (WMB) posted a standout gain after agreeing to pay nearly $6 billion to expand its ownership of Access Midstream Partners (ACMP).

Computer hardware stocks also saw notable strength on the day, while airline stocks pulled back further off their recent highs amid concerns about higher jet fuel prices.

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 tumbled by 1.1 percent, while China's Shanghai Composite Index advanced by 0.7 percent.

Meanwhile, the major European markets all ended the day on the downside. While the French CAC 40 Index dropped by 0.7 percent, the U.K.'s FTSE 100 Index and the German DAX Index both fell by 0.3 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.597 percent.

Looking Ahead

While reports on consumer prices and housing starts may attract some attention on Tuesday, trading activity may remain somewhat subdued as the Fed's monetary policy decision looms.