U.S. Stocks Move Mostly Higher, Extending Upward Trend

Following the strong upward move seen last week, stocks saw some further upside during trading on Monday. With the continued advance, the Nasdaq and the S&P 500 once again reached their best closing levels in over a year.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Nasdaq jumped 131.25 points or 0.9 percent to 14,244.95, the S&P 500 climbed 17.37 points or 0.4 percent to 4,522.79 and the Dow rose 76.32 points or 0.2 percent to 34,585.35.

The strength on Wall Street partly reflected recent upward momentum, as encouraging inflation data has added to optimism about the outlook for interest rates ahead of next week’s Federal Reserve meeting.

While the Fed is widely expected to raise rates by another quarter point, traders are hopeful that will mark the final rate hike.

Trading activity remained somewhat subdued, however, as traders looked ahead to the release of some key economic data over the coming days.

Reports on retail sales, industrial production, housing starts and existing home sales are likely to attract attention, as traders look for additional clues about the outlook for the economy and interest rates.

Earnings season will also start to pick up steam this week, with Bank of America (BAC), Morgan Stanley (MS), Goldman Sachs (GS), IBM Corp. (IBM), Netflix (NFLX), Tesla (TSLA), Johnson & Johnson (JNJ) and American Express (AXP) among the companies due to report their quarterly results.

On the U.S. economic front, the New York Federal Reserve released a report showing a pullback in the pace of growth in regional manufacturing activity in the month of July.

The New York Fed said its general business conditions index fell to 1.1 in July after surging to 6.6 in June, although a positive reading still indicates growth. Economists had expected the index to drop to zero.

Sector News

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 2.3 percent to its best closing level in over a year.

Notable strength also emerged among banking stocks, as reflected by the 1.1 percent gain posted by the KBW Bank Index.

On the other hand, telecom stocks extended last Friday’s sell-off, dragging the NYSE Arca North American Telecom Index down by 4.5 percent to a three-year intraday low.

Shares of A&T (T) plummeted by 4.5percent after Citi downgraded its rating on the telecom giant’s stock to Neutral from Buy.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index slumped by 0.9 percent, while South Korea’s Kospi fell by 0.4 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index tumbled by 1.1 percent, the U.K.’s FTSE 100 Index declined by 0.4 percent and the German DAX Index dipped by 0.2 percent.

In the bond market, treasuries fluctuated over the course of the session before closing moderately higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.2 basis points to 3.797 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to a slew of U.S. economic data, including reports on retail sales, industrial production and homebuilder confidence.

On the earnings front, Bank of America (BAC), Charles Schwab (SCHW), Hasbro (HAS), Morgan Stanley (MS) and Lockheed Martin (LMT) are among the companies due to report their quarterly results before the start of trading.

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