Stocks showed a lack of direction over the course of the trading session on Monday before eventually ending the day mostly higher. The major averages all finished the day in positive territory following the mixed performance seen last Friday.
The Dow (DOWI:DJI) inched up 17.15 points or less than a tenth of a percent to a new record closing high of 42,330.15, while the Nasdaq climbed 69.58 points or 0.4 percent to 18,189.17. The S&P 500 (SPI:SP500) also rose 24.31 points or 0.4 percent to a new record closing high of 5,762.48.
Stocks initially came under pressure in reaction to remarks by Federal Reserve Chair Jerome Powell before rebounding going into the close.
The Fed chief suggested the central bank will continue to lower interest rates but stressed the downward path for rates is not on a preset course.
Powell said the decision to slash rates by half a percentage point earlier this month reflects the Fed’s growing confidence that an appropriate recalibration of monetary policy will maintain strength in the labor market and keep inflation moving sustainably down to the 2 percent target.
“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance,” Powell said.
“But we are not on any preset course,” he continued. “The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
Powell’s remarks partly offset optimism the Fed will continue to lower interest rates aggressively in the coming months.
The Fed’s next monetary policy meeting is scheduled for November 6-7, with CME Group’s FedWatch Tool currently indicating a 65.3 percent chance the central bank will lower rates by 25 basis points and a 34.7 percent chance of another 50 basis point rate cut.
Sector News
Despite the advance by the broader markets, most of the major sectors ended the day showing only modest moves.
Gold stocks saw considerable weakness, however, with the NYSE Arca Gold Bugs Index tumbling by 2.1 percent. The weakness among gold stocks came amid a decrease by the price of the precious metal.
Telecom and semiconductor stocks also saw some weakness on the day, while airline and biotechnology stocks moved to the upside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a starkly mixed performance during trading on Monday. Japan’s Nikkei 225 Index plunged by 4.8 percent, while China’s Shanghai Composite Index skyrocketed by 8.1 percent.
Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index tumbled by 2.0 percent, the U.K.’s FTSE 100 Index slumped by 1.0 percent and the German DAX Index slid by 0.8 percent.
In the bond market, treasuries came under pressure in reaction to Powell’s remarks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.3 basis points to 3.802 percent.
Looking Ahead
Trading on Tuesday may be impacted by reaction to reports on activity in the manufacturing sector and job openings.
SOURCE: RTTNEWS