U.S. Give Back Ground After Early Rally But Close Mostly Higher

(RTTNews) - After moving sharply higher early in the session, stocks gave back ground over the course of the trading day on Monday. The major averages pulled back well off their early highs but managed to close in positive territory.

The Dow surged more than 360 points in early trading but ended the day up by just 72.17 points or 0.2 percent at 32,889.09. The Nasdaq climbed 72.04 points or 0.6 percent to 11,466.98 and the S&P 500 rose 12.20 points or 0.3 percent to 3,982.24.

The early rally on Wall Street partly reflected bargain hunting, as some traders looked to pick up stocks at reduced levels following the steep drop seen last week.

The sell-off seen last Friday dragged the Dow down to a two-month closing low, while the S&P 500 tumbled to its lowest closing level in over a month.

For the holiday-shortened week, the S&P 500 dove by 2.7 percent, while the Dow and the Nasdaq plummeted by 3.0 percent and 3.3 percent, respectively.

However, buying interest waned over the course of the session, as traders continue to express concerns about the outlook for interest rates.

Recent economic data has led to worries the Federal Reserve will raise rates more than currently anticipated and hold rates at an elevated level for an extended period.

On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in new orders for durable goods in the month of January.

The report said durable goods orders plunged by 4.5 percent in January after surging by a downwardly revised 5.1 percent in December.

Economists had expected durable goods orders to tumble by 4.0 percent compared to the 5.6 percent spike that had been reported for the previous month.

The steep drop by durable goods orders came as orders for transportation equipment plummeted by 13.3 percent in January after soaring by 15.8 percent in December.

Excluding orders for transportation equipment, durable goods orders climbed by 0.7 percent in January after falling by 0.4 percent in December. Economists had expected a 0.1 percent uptick.

Meanwhile, the National Association of Realtors released a separate report showing pending home sales in the U.S. spiked by much more than expected in the month of January.

NAR said its pending home sales index soared by 8.1 percent to 82.5 in January after jumping by 1.1 percent to a downwardly revised 76.3 in December.

Economists had expected pending home sales to advance by 1.0 percent compared to the 2.5 percent surge originally reported for the previous month.

Sector News

Oil service stocks turned in a strong performance on the day, driving the Philadelphia Oil Service Index up by 1.4 percent.

The strength among oil service stocks came despite a decrease by the price of crude oil, with crude for April delivery falling $0.64 to $75.68 a barrel.

Significant strength was also visible among transportation stocks, as reflected by the 1.3 percent gain posted by the Dow Jones Transportation Average.

Union Pacific (UNP) led the sector higher, soaring by 10.1 percent after the railroad said it expects to name a successor to CEO Lance Fritz later this year.

Steel stocks also saw considerable strength on the day, resulting in a 1.3 percent advance by the NYSE Arca Steel Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index edged down by 0.1 percent, while China's Shanghai Composite Index dipped by 0.3 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index surged by 1.5 percent, the German DAX Index jumped by 1.1 percent and the U.K.'s FTSE 100 Index climbed by 0.7 percent.

In the bond market, treasuries showed a notable turnaround after seeing initial weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 3.922 percent.

Looking Ahead

Reports on consumer confidence and Chicago-area business activity may attract attention on Tuesday, although trading activity may be somewhat subdued ahead of the release of more closely watched data in the coming days.