U.S. Stocks Finish Lackluster Session Modestly Higher

After moving sharply higher over the course of the previous week, stocks turned in a relatively lackluster performance during trading on Monday. The major averages spent most of the day lingering near the unchanged line before closing modestly higher.

While the Nasdaq climbed 40.50 points or 0.3 percent to 13,518.78 and the S&P 500 rose 7.64 points or 0.2 percent to 4,365.98, the narrower Dow inched up 34.54 points or 0.1 percent to 34,095.86, its best closing level in well over a month.

The modestly higher close on Wall Street came as traders continued to express optimism about the outlook for interest rates.

The Federal Reserve’s monetary policy announcement last Wednesday combined with softer than expected jobs data last Friday has led to optimism that the central bank is done raising interest rates.

CME Group’s FedWatch Tool currently indicates the Fed is likely to leave rates unchanged in the coming months until potentially cutting rates in mid-2024.

Trading activity remained somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Several Fed officials, including Fed Chair Jerome Powell, are due to speak in the coming days, while traders are also likely to keep an eye on reports on the U.S. trade deficit, initial jobless claims and consumer sentiment.

Sector News

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

Steel stocks turned in a strong performance on the day, however, with the NYSE Arca Steel Index climbing by 1.5 percent.

Significant strength was also visible among pharmaceutical stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca Pharmaceutical Index.

On the other hand, airline stocks showed a substantial move to the downside, dragging the NYSE Arca Airline Index down by 2.8 percent.

Natural gas, oil service and commercial real estate stocks also saw considerable strength, partly offsetting the strength in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Monday. Japan’s Nikkei 225 Index surged by 2.4 percent, while South Korea’s Kospi spiked by 5.7 percent.

Meanwhile, most European stocks moved to the downside on the day. While the U.K.’s FTSE 100 Index ended the session nearly unchanged, the German DAX Index fell by 0.4 percent and the French CAC 40 Index slid by 0.5 percent.

In the bond market, treasuries pulled back sharply after moving significantly higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.4 basis points to 4.662 percent.

Looking Ahead

A report on the U.S trade deficit in the month of September may attract attention on Tuesday along with remarks by several Fed officials.

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