After ending last Friday’s trading on opposite sides of the unchanged line, the major U.S. stocks indexes turned in another mixed performance during trading on Monday. While the tech-heavy Nasdaq ended the day firmly in positive territory, the Dow dipped to its lowest closing level in four months.
The Nasdaq climbed 88.45 points or 0.7 percent to 13,307.77 and the S&P 500 crept up 0.34 points or less than a tenth of a percent to 4,288.39, but the Dow slipped 74.15 points or 0.2 percent to 33,433.35.
Concerns about the outlook for interest rates continued to hang over the markets ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
Economists currently expect employment to increase by 163,000 jobs in September after climbing by 187,000 jobs in August, while the unemployment rate is expected to edge down to 3.7 percent from 3.8 percent.
Negative sentiment was also generated in reaction to a surge by treasury yields, with the yield on the benchmark ten-year note jumping to its highest level in almost sixteen years.
The spike by yields came after U.S. lawmakers passed a last minute, temporary spending bill over the weekend to keep the U.S. government open.
“Over the weekend, Congress opted to kick the can down the road, passing a short-term stopgap funding bill,” said Edward Moya, senior market analyst at OANDA. “This measure means the government will remain open until November 17th, providing natural disaster aid but not additional funding for Ukraine or border security.”
He added, “With a temporary funding solution in place, Wall Street quickly returned to fueling the bond market selloff, which helped send the dollar higher across all its major trading partners.”
On the U.S. economic front, the Institute for Supply Management released a report showing a modest slowdown in the pace of contraction in U.S. manufacturing activity in the month of September.
The ISM said its manufacturing PMI rose to 49.0 in September from 47.6 in August, although a reading below 50 still indicates a contraction. Economists had expected the index to inch up to 47.7.
A separate report released by the Commerce Department showed construction spending in the U.S. increased in line with economist estimates in the month of August.
The Commerce Department said construction spending climbed 0.5 percent to an annual rate of $1.984 trillion in August after jumping by an upwardly revised 0.9 percent to a rate of $1,847.3 billion in July.
Economists had expected construction spending to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.
Sector News
Interest rate-sensitive utilities stocks turned in some of the worst performances on the day, dragging the Dow Jones Utility Average down by 4.1 percent to its lowest closing level in over three years.
Substantial weakness was also visible among gold stocks, as reflected by the 3.8 percent nosedive by the NYSE Arca Gold Bugs Index. The index tumbled to an eleven-month closing low.
The sell-off by gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery falling $18.90 to $1,847.20 an ounce.
Natural gas, oil service and airline stocks also saw considerable weakness on the day, while software stocks showed a strong move to the upside.
Other Markets
In overseas trading stock markets across the Asia-Pacific region moved mostly lower on Monday, with markets in China, Hong Kong and South Korea closed for holidays. Japan’s Nikkei 225 Index slipped by 0.3 percent, while Australia’s S&P/ASX 200 Index edged down by 0.2 percent.
The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index tumbled by 1.3 percent, the French CAC 40 Index and the German DAX Index both slumped by 0.9 percent.
In the bond market, treasuries pulled back sharply following the rebound seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 11.0 basis points to 4.683 percent.
Looking Ahead
Trading on Tuesday may be impacted by reaction to the Labor Department’s report on job openings in the month of August.
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