U.S. Stocks Close Mostly Higher Amid Optimism About Economy

Following the strong gains posted last week, stocks saw some further upside during the trading session on Monday. With the continued advance on the day, the Nasdaq and the S&P 500 ended the session at their best closing levels in three months.

The major averages ended the day off their highs of the session but still firmly in positive territory. The Dow climbed 91.91 points or 0.4 percent to 25,475.02, the Nasdaq advanced 62.18 points or 0.7 percent to 9,552.05 and the S&P 500 rose 11.42 points or 0.4 percent to 3,055.73.

The continued strength on Wall Street came following the release of a report from the Institute for Supply Management showing U.S. manufacturing activity contracted at a slower rate in the month of May.

The ISM said its purchasing managers index rose to 43.1 in May from 41.5 in April, coming in just below economist estimates for a reading of 43.6.

While the index rebounded from its lowest level since April of 2009, a reading below 50 still indicates a contraction in manufacturing activity.

Nonetheless, Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, said the latest figure indicates expansion in the overall economy after April’s contraction.

The report from the ISM came on the heels of a private survey showing the Chinese manufacturing sector expanded in May.

The Caixin manufacturing PMI score came in at 50.7 in May, beating expectations for a score of 49.6 and up from 49.4 in April. A reading above 50 indicates an expansion in manufacturing activity.

A separate report from the Commerce Department showed a sharp pullback in U.S. construction spending in the month of April, although the decrease was much smaller than economists had expected.

Traders remain generally optimistic about economies reopening despite political unrest across the country following the death of George Floyd, which has forced a number of major retailers to temporarily close their stores in areas hit hard by protests.

Sector News

Gold stocks moved sharply higher over the course of the trading session, driving the NYSE Arca Gold Bugs Index up by 2.8 percent.

The rally by gold stocks came despite a modest decrease by the price of the precious metal, as gold for August delivery slipped $1.40 to $1,750.30 an ounce.

Significant strength was also visible among banking stocks, with the KBW Bank Index jumping by 1.9 percent following the sharp pullback seen over the two previous sessions.

Natural gas, commercial real estate and oil stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index climbed by 0.8 percent, while Hong Kong’s Hang Seng Index jumped by 3.4 percent.

European stocks also moved to the upside on the day, although several major markets were closed for public holidays. The U.K.’s FTSE 100 Index and the French CAC 40 Index surged up by 1.5 percent and 1.4 percent, respectively.

In the bond market, treasuries climbed well off their worst levels but still ended the day modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.4 basis points at 0.662 percent.

Looking Ahead

Trading on Tuesday may be somewhat subdued amid a lack of major U.S. economic data, with traders looking ahead to the closely watched monthly jobs report on Friday.

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