(RTTNews) - Stocks were able to eke out solid gains on Monday after reaction to a number of economic reports and some Fed comments on the financial sector prompted some volatility. The major averages all finished in positive territory, recovering some of last week’s losses.

While the markets saw early strength, stocks gave back some ground after Jon Greenlee, associate director of the Federal Reserve’s division of banking supervision and regulation, revealed concerns over the state of the financial system.

Greenlee said the U.S. banking system is “far from robust,” sparking a pullback in the financial sector.

Separately, the Federal Reserve Governor Daniel Tarullo remarked that even though the economy has begun to show signs of life, the outlook on the magnitude of the recovery should be cautiously optimistic.

The day’s initial buying interest came after the Institute for Supply Management released its report on manufacturing activity in the month of October, showing that activity expanded for the third consecutive month amid a jump in production and employment.

The ISM said its index of activity in the manufacturing sector rose to 55.7 in October from 52.6 in September, with a reading above 50 indicating growth in the sector. Economists had been expecting a more modest increase by the index to a reading of 53.0.

Additionally, pending home sales rose for a record eighth straight month in September, according to a report released by the National Association of Realtors, with the pending home sales index rising to its highest level since December of 2006.

The headline pending home sales index rose 6.1 percent to 110.1 in September from a reading of 103.8 in August. The increase in the index came as a surprise to economists, who had expected the index to edge down 0.1 percent.

Separately, the U.S. Commerce Department revealed that construction spending rose 0.8 percent in September, following a 0.1 percent decline in August and a 1.2 percent slide in July.

In corporate news, troubled lender CIT Group Inc. (CIT) has filed for Chapter 11 bankruptcy protection. The company said on Sunday that its Board of Directors voted to proceed with the prepackaged plan of reorganization for the company and a subsidiary that would restructure its debt and streamline its capital structure.

The major averages moved to the upside going into the close, ending the day above the unchanged line. The Dow closed up 76.71 at 9,789.44, the Nasdaq closed up 4.09 at 2,049.20 and the S&P 500 closed up 6.69 at 1,042.88.

Sector News

Biotechnology and healthcare provider stocks saw some of the day’s strongest performances, with the NYSE Arca Biotechnology Index and the Morgan Stanley Healthcare Provider Index rising by 2.9 percent and 1.8 percent, respectively.

The biotechnology index bounced off of the three-month closing low set on Friday, while the healthcare provider index saw some recovery from Friday’s seven-week closing low.

Chemical stocks also moved notably higher on the day, as reflected by the 1.3 percent gain posted by the S&P Chemical Index. The climb helped the index move off of the two-month closing low set last Friday.

Gold, banking and steel stocks also, while airline stocks saw some of the day’s more notable losses. The NYSE Arca Airline Index slipped by 0.9 percent, setting a two-month closing low.

Dow Components

JP Morgan Chase (JPM) posted one of the strongest percentage gains in the Dow, rising by 1.9 percent on the day. The stock was able to bounce off last Friday’s three and a half week closing low.

American Express (AXP) also moved higher on the day, posting a gain of 2.4 percent. Despite the strong gain, the stock remained stuck in a recent trading range.

United Technologies (UTX), Procter & Gamble (PG), Hewlett Packard (HPQ), General Electric (GE) and DuPont (DD) also saw considerable moves to the upside, offsetting some of their recent losses.

Meanwhile, Verizon (VZ), Intel (INTC) and Pfizer (PFE) declined on the day, moving further off of last month’s highs.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed lower on Monday. Japan’s benchmark Nikkei 225 Index fell by 2.3 percent on the day, while Hong Kong’s Hang Seng Index lost 0.6 percent.

Meanwhile, the major European markets closed on the upside. The U.K.’s FTSE 100 and the French CAC 40 Index rose by 1.2 percent and 0.9 percent, respectively, while the German DAX Index gained 0.3 percent.

In the bond markets, treasuries saw modest weakness amid the gains on Wall Street. The benchmark ten-year yield finished at 3.422 percent, posting a gain of 3.0 basis points.

Looking Ahead

Tuesday, traders may turn their attention to a report on factory orders and any news regarding the Federal Open Market Committee, which begins its two-day rate setting meeting.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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