Stocks Close Roughly Flat After Recovering From Early Weakness - U.S. Commentary

(RTTNews) - After recovering from an early move to the downside, stocks showed a lack of direction for much of the trading session on Monday. The major averages spent the day bouncing back and forth across the unchanged line before closing roughly flat.

While the Dow and the Nasdaq managed to end the day in positive territory, the S&P 500 edged down 2.95 points or 0.2 percent to 1,961.63. The Dow rose 12.53 points or 0.1 percent to 16,817.94, and the Nasdaq inched up 2.22 points or 0.1 percent to 4,485.93.

The early weakness on Wall Street was partly due to profit taking, with some traders cashing in on the strong performance shown by the markets last week.

Selling pressure waned not along after the open, however, as traders seemed reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday.

The Fed is widely expected to wrap up its asset purchase program, with traders likely to focus on any comments regarding the outlook for interest rates.

A number of closely watched economic reports are also scheduled to be released later in the week, including data on durable goods orders, third quarter GDP, and personal income and spending.

The National Association of Realtors released a report this morning showing a modest uptick in pending home sales in the month of September.

NAR said its pending home sales index inched up by 0.3 percent to 105.0 in September after falling by 1.0 percent to 104.7 in August. Economists had been expecting pending home sales to increase by about 0.5 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

In earnings news, shares of Merck (MRK) moved to the downside after the drug giant reported third quarter earnings that fell year-over-year but came in above analyst estimates. The company also tightened its adjusted earnings guidance for the full year.

Social media giant Twitter (TWTR) is among the slew of companies releasing their quarterly results after the close of trading.

Sector News

While many of the major sectors ended the day showing only modest moves, considerable weakness remained visible among energy stocks. The continued weakness in the sector came even though the price of crude oil closed nearly flat after recovering from a low of $79.44 a barrel.

Oil service stocks turned in some of the worst performances within the energy sector, resulting in a 3.4 percent drop by the Philadelphia Oil Service Index.

Significant weakness was also visible among steel and chemical stocks, with the NYSE Arca Steel Index and the Dow Jones Chemicals Index falling by 2.6 percent and 2.1 percent, respectively.

On the other hand, biotechnology stocks showed a notable move to the upside, driving the NYSE Arca Biotechnology Index up by 1.1 percent. The gain extended a recent upward move by the index, which reached a new record closing high.

Electronic storage, airline, and trucking stocks also saw some strength on the day, offsetting the weakness seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index dropped by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell 0.4 percent, the French CAC 40 Index slid by 0.8 percent and the German DAX Index slumped by 1 percent.

In the bond market, treasuries closed modestly higher after ending the previous session nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.6 basis points to 2.257 percent.

Looking Ahead

Earnings news may attract some attention on Tuesday, with Aetna (AET), Corning (GLW), DuPont (DD), Honda (HMC), Pfizer (PFE), and Whirlpool (WHR) among the companies due to release their quarterly results before the start of trading.

Traders are also likely to keep an eye on the latest economic data, including reports on durable goods orders, home prices, and consumer confidence.