U.S. Stocks Give Back Ground After Initial Move To The Upside

After showing a strong move to the upside early in the session, stocks have given back ground over the course of the trading day on Monday. The major averages have pulled back well off their highs of the session, with the tech-heavy Nasdaq slipping into negative territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 6.21 points or less than a tenth of a percent at 16,168.89, the S&P 500 is up 8.81 points or 0.2 percent at 5,132.22 and the Dow is up 102.30 points or 0.3 percent at 38,085.54.

The initial strength on Wall Street partly reflected a positive reaction to earnings news from Goldman Sachs (GS), with the investment banking company surging by 3.5 percent.

The jump by Goldman Sachs comes after the company reported first quarter earnings that far exceeded analyst estimates on better than expected revenues.

Traders also initially reacted positively to a Commerce Department report showing much stronger than expected U.S. retail sales growth in the month of March.

The Commerce Department said retail sales climbed by 0.7 percent in March after advancing by an upwardly revised 0.9 percent in February.

Economists had expected retail sales to rise by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a pullback by sales by motor vehicle and parts dealers, retail sales jumped by 1.1 percent in March after climbing by 0.6 percent in February. Ex-auto sales were expected to rise by 0.4 percent.

Buying interest has waned over the course of the session, however, as the retail sales data has triggered another spike by treasury yields.

The yield on the benchmark ten-year note has surged to its highest levels in five months, as the data has led to renewed concerns about the outlook for interest rates.

“The robust gain in retail sales in March followed by upward revisions in the prior two months shows the consumer continues to power the overall economy forward,” said Nationwide Chief Economist Kathy Bostjancic.

However, she added, “The lack of moderation in consumer spending and inflation will undermine Fed officials’ confidence that inflation is on a sustainable course back to 2% and likely delays rate cuts to September at the earliest and could push off rate reductions to next year.”

Most of the major sectors are showing only modest moves, contributing to the lackluster performance by the broader markets.

While pharmaceutical and steel stocks are seeing some strength on the day, gold stocks have shown a notable move to the downside amid a modest decrease by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index both slid by 0.7 percent, although China’s Shanghai Composite Index bucked the downtrend and jumped by 1.3 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.3 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.7 percent.

In the bond market, treasuries have climbed off their worst levels of the day but remain sharply lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 13.1 basis points at 4.630 percent.