Market Wrap for Monday, June 3: Stocks Rise to Start Week

Despite a very disappointing ISM reading for May which caused volatility in the currency markets, stocks did well to start the week on Monday. Blue chips led the way, with the Dow adding 1 percent.

The strong session was a welcome sign to investors after the market fell sharply last Friday. Going forward, it appears that volatility could pick up on Wall Street, but for now, the bull market remains intact.

Major Averages

The Dow Jones Industrial Average climbed 138 points, or 0.92 percent, to close at 15,254.

The S&P 500 added a little less than 10 points, or 0.59 percent, to 1,640.

The Nasdaq rose better than 9 points, or 0.27 percent, to 3,465.

ISM Index

The ISM Manufacturing Index fell to 49.0 in the month of May compared to a reading of 50.7 in April. This was the first contraction in ISM since November 2012 and the lowest reading since June 2009. The consensus expected that the index would rise to 50.9.

Construction Spending

For April, construction spending rose 0.4 percent compared to a decline of 0.8 percent for March. The consensus had expected an increase of 1.1 percent for April.

Commodities

Energy prices rose on Monday to start the week. Near the close, NYMEX crude futures were trading up 1.61 percent to $93.45. Brent contracts had added 1.78 percent to $102.18. Natural gas climbed 0.28 percent on the day to $4.00.

Precious metals also moved higher to start the week. In late trade, COMEX gold futures were up 1.23 percent to $1,410.20. Silver traded up 2 percent to $22.69 and copper futures added a little better than 1 percent on Monday.

In the grain complex, corn and wheat prices were mixed. At last check, corn was down around 1.28 percent while wheat had added 0.46 percent. In soft commodities, cocoa traded up around 2.50 percent and cotton was last up almost 4 percent on the session.

Bonds

Bond prices were higher near the close of equity trading on Monday. The iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) had added 0.42 percent to $114.74. Yields were largely unchanged on the day.

The 2-Year Note yield was flat at 0.29 percent while the 5-Year yield rose one basis point to 1.03 percent. The 10-Year yield was unchanged at 2.13 percent and the 30-Year Bond yield fell one basis point to 3.27 percent.

Currencies

The U.S. dollar fell sharply on Monday as investors reacted to the disappointing ISM number. Heading into the closing bell, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was down 0.69 percent to $22.44.

The closely watched EUR/USD pair was last up 0.72 percent to $1.3074. Other movers included the USD/JPY, which was last down 1.22 percent, and the GBP/USD, which rose 0.96 percent. In a volatile currency session, the USD/CAD also fell 0.89 percent while the AUD/USD jumped almost 2 percent.

Volatility and Volume

The VIX was basically unchanged late on Monday despite rising stock prices. At last check, the widely watched barometer of market fear was down 0.18 percent to 16.27.

Volume was heavier than normal as activity picked up on Wall Street on Monday. Around 145 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 125 million.

Stock Movers

Clovis Oncology (NASDAQ:CLVS) was trading up nearly 98 percent late in the day after the company announced encouraging initial findings from the Phase I portion of its ongoing clinical study of CO-1686. The drug is a targeted covalent inhibitor of mutant forms of the epidermal growth factor receptor, for the treatment of non-small cell lung cancer in patients with initial activating EGFR mutations as well as the dominant resistance mutation T790M.

Shares of Tesaro (NASDAQ:TSRO) had jumped almost 36 percent late on Monday after the company announced that it would partner with Breast International Group and the European Organization for Research and Treatment of Cancer for the Phase III development of niraparib.

Biotech company Mannkind (NASDAQ:MNKD) saw its shares jump around 14 percent heading into the closing bell. Mannkind has been the subject of takeover rumors in recent weeks and announced the completion of its Phase III clinical study of Afrezza in patients with type 1 Diabetes last Friday.

SodaStream (NASDAQ:SODA) climbed around 8 percent on Monday after analysts at Barclays raised their price target on the stock by 82 percent to $100.00.

Pandora Media (NYSE:P) fell more than 10 percent after the Wall Street Journal reported that Apple (NASDAQ:AAPL) signed a licensing deal with Warner Music Group. The deal could open the door for Apple to launch a streaming music service on iTunes similar to Pandora's.

Zynga (NASDAQ:ZNGA) plunged around 12 percent late on Monday after the company announced job cuts and significant cost reductions amid operational headwinds.

Daily deals site Groupon (NASDAQ:GRPN) was also lower on the day in the wake of the Zynga news. At last check, GRPN was trading down roughly 7 percent.

Shares of Japanese financial institution Nomura Holdings (NYSE:NMR) continued their recent slide on Monday. The ADR was last trading down better than 6 percent on the day.