WASHINGTON (dpa-AFX) - Stocks showed a lack of direction early in the
session on Monday but moved notably higher over course of the trading day. The
major averages all moved to the upside, with the Nasdaq and the S&P 500 reaching
new record closing highs.

The major averages pulled back off their best levels going into the close but
remained firmly positive. The Nasdaq jumped 168.14 points or 1.0 percent to
17,857.02, the S&P 500 advanced 41.63 points or 0.8 percent to 5,473.23 and the
Dow climbed 188.94 points or 0.5 percent to 38,778.10.

Traders initially seemed reluctant to make significant moves as they took a
moment to assess the recent activity in the markets and the near-term outlook.

Buying interest emerged over the course of the session, however, with stocks
potentially benefiting from the positive sentiment generated last week.

Tamer-than-expected inflation data led to strong gains by the Nasdaq and the S&P
500 last week, although the narrower Dow bucked the uptrend.

While Federal Reserve officials forecast just one interest rate cut this year
following last Wednesday's monetary policy meeting, traders remain hopeful the
predictions will turn out to be overly conservative if inflation continues to
slow in the coming months.

Meanwhile, traders continued to look ahead to the release of some key economic
data this, with reports on retail sales and industrial production are likely to
be in the spotlight.

On the U.S. economic front, the Federal Reserve Bank of New York released a
report this morning showing New York manufacturing activity contracted at a
notably slower rate in the month of June.

The New York Fed said its general business conditions index climbed to a
negative 6.0 in June from a negative 15.6 in May, although a negative reading
still indicates contraction. Economists had expected the index to rise to a
negative 9.0.

Despite the continued contraction in current activity, the New York Fed said
optimism about the six-month outlook picked up to its highest level in more than
two years.

Sector News

Oil service stocks moved sharply higher along with the price of crude oil, with
the Philadelphia Oil Service Index surging by 2.1 percent after ending last
Friday's trading at a four-month closing low.

Considerable strength also emerged among computer hardware stocks, as reflected
by the 2.0 percent jumped by the NYSE Arca Computer Hardware Index.

Airline stocks also showed a significant move to the upside on the day, driving
the NYSE Arca Airline Index up by 1.7 percent.

Semiconductor, banking and software stocks also saw notable strength, while
utilities and telecom stocks bucked the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly
lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.8 percent,
while China's Shanghai Composite Index slid by 0.6 percent.

Meanwhile, the major European markets turned in a mixed performance on the day.
While the U.K.'s FTSE 100 Index edged down by 0.1 percent, the German DAX Index
rose by 0.4 percent and the French CAC 40 Index advanced by 0.9 percent.

In the bond market, treasuries gave back ground after trending higher over the
past several sessions. As a result, the yield on the benchmark ten-year note,
which moves opposite of its price, climbed 6.6 basis points to 4.279 percent.

Looking Ahead

Trading on Tuesday may be impacted by reaction to the U.S. economic reports on
retail sales and industrial production.



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