U.S. Stocks Giving Back Ground After Seeing Early Strength

After moving sharply higher early in the session, stocks have given back ground over the course of the trading day on Monday. The major averages have pulled back well off their highs of the session but currently remain in positive territory.

The Dow surged by more than 350 points in early trading but is currently up just 42.23 points or 0.1 percent at 31,330.49. The Nasdaq is up 58.05 points or 0.5 percent at 11,510.47, while the S&P 500 is up 8.66 points or 0.2 percent at 3,871.82.

The early strength on Wall Street came as traders continued to pick up stocks at relatively reduced levels after the rally seen last Friday halted a recent downward trend.

Positive sentiment was also generated in reaction to upbeat earnings news from Goldman Sachs (GS), with the financial giant jumping by 2.1 percent.

The advance by Goldman Sachs comes after the company reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Shares of Bank of America (BAC) have also moved modestly higher even though the financial giant reported weaker than expected second quarter earnings.

Buying interest has waned over the course of the session, however, as traders look ahead to the release of earnings news from a slew of big-name companies later this week.

IBM Corp. (IBM), Johnson & Johnson (JNJ), Netflix (NFLX), Tesla (TSLA), American Express (AXP) and Twitter (TWTR) are among the companies due to report their quarterly results.

Traders may also be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy decision next week, when the central bank is expected to raise interest rates by at least 75 basis points.

In U.S. economic news, the National Association of Home Builders released a report showing a substantial deterioration in U.S homebuilder confidence in the month of July.

The report showed the NAHB/Wells Fargo Housing Market Index plunged to 55 in July from 67 in June. Economists had expected the index to edge down to 66.

The HMI showed its second biggest single-month drop after a 42-point nosedive in April 2020, tumbling to its lowest level since May 2020.

Sector News

Despite the pullback by the broader markets, energy stocks continue to see substantial strength, benefiting from a continued surge in crude oil prices. Crude for August delivery is currently spiking $4.33 to $101.92 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 4.6 percent, the NYSE Arca Oil Index is up by 3.6 percent and the NYSE Arca Natural Gas Index is up by 2.8 percent.

Significant strength also remains visible among steel stocks, as reflected by the 2.6 percent jump by the NYSE Arca Steel Index. The index continues to regain ground after ending last Thursday’s trading at its lowest closing level in well over a year.

Gold stocks also continued to see considerable strength amid a modest increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index surging by 2.4 percent.

Tobacco, retail and transportation stocks also continue to turn in strong performances, while healthcare and utilities stocks have come under pressure over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index surged by 1.6 percent, while Hong Kong’s Hang Seng Index spiked by 2.7 percent.

The major European markets also moved to the upside on the day. While the While the German DAX Index climbed by 0.7 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both advanced by 0.9 percent.

In the bond market, treasuries have climbed off their worst levels of the day but remain firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.4 basis points at 2.984 percent.

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