U.S. Stocks Finish Lackluster Session Modestly Lower

Following the rally seen to close out the previous week, stocks turned in a relatively lackluster performance during trading on Monday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually finished the session in negative territory. The Nasdaq edged down 11.34 points or 0.1 percent to 13,229.43 and the S&P 500 dipped 8.58 points or 0.2 percent to 4,273.79, while the narrower Dow slid 199.90 points or 0.6 percent to33,562.86.

The choppy trading on Wall Street came as some traders looked to take a break to assess the outlook for the markets following the strong upward move seen last Thursday and Friday.

The rally came amid the passage of legislation raising the U.S. debt ceiling and the release of the closely watched monthly jobs report.

With the surge, the Nasdaq reached its best closing level in well over a year, while the S&P 500 set a new nine-month closing high.

Trading activity may remain somewhat subdued throughout the week as traders look ahead to next week’s Federal Reserve meeting.

The Fed is due to announce its latest monetary policy decision next Wednesday, with the central bank widely expected to pause its recent series of interest rate hikes.

Key inflation reports are also likely to be in the spotlight next week, as the data could impact whether the Fed resumes its rate hikes next month.

In U.S. economic news, the Institute for Supply Management released a report showing service sector activity in the U.S. saw only modest growth in the month of May, with the index of activity in the sector falling by more than expected.

The ISM said its services PMI fell to 50.3 in May from 51.9 in April, although a reading above 50 still indicates growth in the sector. Economists had expected the index to edge down to 51.5.

A separate report released by the Commerce Department showed new orders for U.S. manufactured goods increased by slightly less than expected in the month of April.

The report said factory orders rose by 0.4 percent in April after climbing by a downwardly revised 0.6 percent in March.

Economists had expected factory orders to climb by 0.5 percent compared to the 0.9 percent advance originally reported for the previous month.

Sector News

Most of the major sectors showed only modest moves on the day, although considerable weakness was visible among networking stocks.

The NYSE Arca Network Index tumbled by 2.1 percent after ending last Friday’s trading at its best closing level in well over a month.

Oil service stocks also saw considerable weakness despite an increase by the price of crude oil, dragging the Philadelphia Oil Service Index down by 1.9 percent.

Semiconductor, computer hardware and tobacco stocks also saw notable weakness, while some strength was visible among utilities and software stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index surged by 2.2 percent, while Hong Kong’s Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets moved to the downside on the day. While the French CAC 40 Index slumped by 1.0 percent, the German DAX Index fell by 0.5 percent and the U.K.’s FTSE 100 Index edged down by 0.1 percent.

In the bond market, treasuries showed a lack of direction over the course of the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 3.693 percent.

Looking Ahead

Overall trading activity is likely to remain relatively subdued on Tuesday amid a quiet day on the U.S. economic front.

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