US Markets Closed Mixed on Monday

US markets closed mixed on Monday. The S&P 500 (SPX) lost 0.07 % and ended at 1,984.13. The Nasdaq Composite (RIXF) fell 48.70 points, or 1%, to 4,518.90, as investors shed their hi-tech holdings in biotechs and internet stocks. The decline in Nasdaq is the biggest drop since July 31. The Dow Jones Industrial Average (DJI) closed 43.63 points or 0.3% higher at 17,031.14. The volume was modest with 5.51 billion shares traded on US exchanges compared to 5.6 billion average so far for the month. The investors have clearly adopted a cautious stance. Earlier on Friday better than expected 0.6% rise in Retail Sales reported by the Commerce Department and better than consensus expectations preliminary September reading on the University of Michigan consumer-sentiment index didn’t have any positive impact on markets. The fall in major indexes came after five straight weeks of gains, with S&P losing 1.1 percent, Dow shedding 0.9 percent and Nasdaq closing down 0.3 percent for the week. Retail sales account for about one third of consumer spending and the solid gain for August after better than forecast figures for June and July indicate improving outlook for the US economy. The investors clearly are discounting positive reports and are more concerned about the possibility of Federal Reserve raising interest rates sooner than previously anticipated and are rebalancing their portfolios by exiting from riskier positions ahead of Federal Reserve’s interest rate policy meeting on Wednesday. The reports that China’s factory output in August grew at its slowest pace in the last six years also contributed to general cautious attitude and added a concern that China’s economy may be slowing down.

After falling about 2.3% for the previous week, oil kept steady as Brent crude oil futures ended little changed on Monday. The International Energy Agency (IEA) monthly oil market report revised downward its forecast for the rise in oil demand for the third month in a row. New European Union and US sanctions against Russia contributed to lower global demand projections. Another factor in global weak demand is slowing Chinese economy. IEA expects global oil demand to grow by 0.9 million barrels a day in 2014, a decrease of 65,000 barrels a day compared with last month’s forecast and down by 300,000 barrels a day since July. The strengthening of US dollar puts further downward pressure on oil as a rise in dollar makes oil more expensive and dampens the demand. The overall market sentiment is bearish, considering increasing US domestic oil production and slower than expected pick up of global demand.

After falling for previous five consecutive trading sessions, gold closed higher on Monday. Gold for December delivery GCZ4, +0.11% rose $3.60 to settle at $1,235.10 an ounce. Gold lost 2.8% the previous week. Improving global economic outlook impacts also the investor stance toward gold. The hedge funds and money managers have reversed their bearish stance on markets and have decreased their long positions in gold futures and options. This has resulted in the lowest net long position in gold since the week of June 22 at 71,376 lots as the Commodity Futures Trading Commission’s Commitment of Traders report data indicate. The net long positions in silver and platinum have undergone the same dynamics with net long positions at 2237 and 25,306 contracts. Clearly the group of investors, known as Managed Money, considers the prospects for safe-haven metals less optimistic with improving outlook for US and world economy.