Major Averages Close Mixed After Seeing Early Weakness

After coming under pressure early in the session, the major U.S. stock indexes turned mixed over the course of the trading day on Monday. The Dow and the S&P 500 recovered to end the day at new record closing highs, while the Nasdaq regained ground but still closed in the red.

While the tech-heavy Nasdaq dipped 29.14 points or 0.2 percent to 14,793.76, the Dow climbed 110.02 points or 0.3 percent to 35,625.40 and the S&P 500 rose 11.71 points or 0.3 percent to 4,479.71.

The mixed performance on Wall Street came as traders remain optimistic about the outlook for the markets despite some signs of weakness in the global economy.

Concerns about the outlook for the global economy contributed to the initial weakness among stocks following the release of disappointing Chinese data.

Chinese industrial production and retail sales growth slowed in July, suggesting a slowdown in the economic recovery amid new COVID-19 outbreaks and supply chain disruptions.

Industrial production growth slowed to 6.4 percent in July from 8.3 percent in June, data from the National Bureau of Statistics revealed. Output was expected to gain 7.8 percent.

Retail sales grew at a slower pace of 8.5 percent on a yearly basis following a 12.1 percent spike in June. This was also weaker than the economists’ forecast of 11.5 percent.

Negative sentiment was also generated in reaction to a report from the New York Federal Reserve showing New York manufacturing activity saw significantly slower growth in the month of August.

The New York Fed said its general business conditions index plunged to 18.3 in August from 43.0 in July. While a positive reading still indicates growth, economists had expected the index to show a much more modest drop to 30.0.

Selling pressure was somewhat subdued, however, as traders looked ahead to closely watched reports on U.S. retail sales and industrial production as well the minutes of the latest Federal Reserve meeting.

Most of the major sectors ended the day showing only modest moves, although energy stocks saw significant weakness amid a steep drop by the price of crude oil. Crude for September delivery tumbled $1.15 to $67.29 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 2.7 percent, the NYSE Arca Oil Index slumped by 2.3 percent and the NYSE Arca Natural Gas Index fell by 1.6 percent.

Steel, biotechnology and airline stocks also saw notable weakness on the day, while some strength emerged among pharmaceutical stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong’s Hang Seng Index slid by 0.8 percent.

The major European markets also moved to the downside on the day. While the German DAX Index fell by 0.3 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index slumped by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries extended the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 1.257 percent.

Looking ahead, trading on Tuesday may be impacted by reaction to reports on retail sales, industrial production and homebuilder confidence along with remarks by Fed Chair Jerome Powell.

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