UKX FTSE 100 Index

By Wallace Witkowski, MarketWatch , Ryan Vlastelica

Equity trading has been marked by lighter-than-usual volume

U.S. stocks closed higher Monday for a third session of gains, recovering most of last week's sharp loss as tech and industrial stocks rallied in a day marked by lighter than usual volume.

The Dow Jones Industrial Average finished up 89.99 points, or 0.4%, to 20,894.83, led higher by more than 1% gains in Boeing Co.(BA), 3M Co.(MMM), UnitedHealth Group Inc.(UNH), Cisco Systems Inc.(CSCO) and Microsoft Corp.(MSFT)

The S&P 500 index rose 12.29 points, or 0.5%, to close at 2,394.02, and swung back into positive territory for the month of May. The day's gains were broad-based, with 10 of the 11 primary S&P 500 sectors rising on the day. The industrials sector rose 0.7% as defense stocks advanced on an arms deal with Saudi Arabia, outstripped only by utilities, up 0.9%, and tech, up 1%.

The Nasdaq Composite Index rose 49.91 points, or 0.8%, to finish at 6,133.62.

With the bulk of earnings season over, investors will scrutinize U.S. political news, like headlines last week that triggered a sharp midweek plunge for stocks (http://www.marketwatch.com/story/us-stock-futures-slide-as-concerns-over-trump-grow-2017-05-17). President Donald Trump traveled to the Middle East (http://www.marketwatch.com/story/trump-urges-muslims-to-fight-crisis-of-extremism-in-saudi-speech-2017-05-21) this weekend and delivered a speech with Israeli Prime Minister Benjamin Netanyahu on Monday.

Read:In the battle for control of the stock market, bulls may have an edge (http://www.marketwatch.com/story/stock-market-set-for-showdown-between-bulls-and-bears-2017-05-20)

Last week's dip was driven by midweek reports that Trump asked then-Federal Bureau of Investigation Director James Comey to stop an investigation (http://www.marketwatch.com/story/trump-denies-asking-comey-to-drop-flynn-investigation-2017-05-18) into Russian meddling (http://www.marketwatch.com/story/white-house-official-probed-over-russia-and-president-called-comey-nut-job-reports-say-2017-05-19) into the U.S. election. Those reports have helped to sow doubt that Trump will be able to push through a pro-growth agenda seen as driving the economy and stocks into higher gear.

It didn't take much to push around stocks Monday with volumes being extremely low, said Sahak Manuelian, managing director of equity trading, in an interview.

"Volumes are terrible across the board," Manuelian said. "I think there's just a lack of market participation within this rally."

By the close, composite volume on the New York Stock Exchange was at 3.14 billion shares, and about 1.71 billion shares on the Nasdaq. Average daily trading volume for year to date has been 3.53 billion shares on the NYSE, and 1.86 billion shares on the Nasdaq, according to Dow Jones data.

Investors will this week try to whether that selloff was temporary or a "signal of something more sinister," said Michael Stanes, investment director at Heartwood Investment Management, in a note Monday.

Read:This chart shows how stocks aren't breaking down--but not breaking out, either (http://www.marketwatch.com/story/this-chart-shows-how-stocks-arent-breaking-down-but-not-breaking-out-either-2017-05-22)

He argued, though, that gains for stocks after the presidential election are also due to improved global economic conditions and fading disinflationary effects that started in summer 2016. The fundamental backdrop hasn't changed, with the U.S. economy still on a solid footing and other global economies steady, said Stanes.

"We recognize that we are in the latter part of the market cycle and sentiment is likely to remain vulnerable to pressure points as we move through the year," he said.

Read:White House to roll out budget proposal, cutting Medicaid, assistance to the poor (http://www.marketwatch.com/story/white-house-to-roll-out-budget-proposal-cutting-medicaid-assistance-to-the-poor-2017-05-22)

Fed speakers ahead: On a quiet day for data, the Chicago national activity index was at a three-year high (http://www.marketwatch.com/story/chicago-feds-national-economic-measure-at-multimonth-high-with-housing-its-only-drag-2017-05-22) of 0.49 in April, compared with 0.07 in March.

Read:Buoyant U.S. economy rides out rough political sea, but more storms ahead (http://www.marketwatch.com/story/buoyant-us-economy-rides-out-rough-political-sea-but-more-storms-ahead-2017-05-21)

Two Fed speakers were lined up to speak after the market closes on Monday. Fed Gov. Lael Brainard is slated to discuss "the roles of opportunity and inclusion in strengthening the U.S. economy" in Minneapolis at 7:30 p.m. Eastern. Then Chicago Fed President Charles Evans gives a speech on the economy at an OTC derivatives conference in Shanghai, China, at 9:10 p.m. Eastern.

Stock movers: Blackstone Group LP(BX) shares closed up 6.7% after Saudi Arabia's Public Investment Fund pledged $20 billion (http://www.marketwatch.com/story/saudi-arabias-20-billion-wager-with-blackstone-is-record-sized-bet-on-us-infrastructure-2017-05-21)to the firm's new infrastructure fund.

Shares of Huntsman Corp.(HUN) fell 2.1%, reversing an earlier advance that came on news it will merge with Switzerland's Clariant AG (CLN.EB), creating a chemicals giant valued at $14 billion. Under terms of the deal announced Monday (http://www.marketwatch.com/story/huntsman-clariant-to-combine-into-20-bln-company-2017-05-22), Clariant shareholders will own 52% of the new entity and Huntsman will own the rest.

Ford Motor Co.(F) shares finished up 2.1% on news the auto maker plans to replace Chief Executive Officer Mark Fields with Jim Hackett (http://www.marketwatch.com/story/ford-to-replace-ceo-mark-fields-with-jim-hackett-amid-pressure-on-profit-2017-05-22), a Ford executive who leads a unit working on autonomous cars.

Companies in the defense sector rose after Saudi Arabia and other Gulf states signed arms deals worth $350 billion (http://www.marketwatch.com/story/defense-stocks-rise-across-the-board-premarket-after-trump-signs-350-billion-of-arms-deals-2017-05-22) with the U.S. over the weekend. Lockheed Martin Corp. (LMT) rose 1.6% while Raytheon Corp. (RTN) added 0.6%. The iShares U.S. Aerospace & Defense ETF(ITA) rose 0.9%.

Advanced Micro Devices Inc.(AMD) shares fell 3.3% on heavy volume after speculation of a licensing deal (http://www.marketwatch.com/story/amds-stock-slumps-after-ceo-pooh-poohed-speculation-of-intel-license-deal-2017-05-22) with Intel Corp. (INTC) faded.

Other markets: Asian stocks were largely higher, outside of a 0.4% dip for the Shanghai . In Europe, stocks finished lower with the Stoxx Europe 600 index down 0.1%.

Read:Miners, oil share lead the FTSE 100 higher (http://www.marketwatch.com/story/miners-oil-shares-lead-the-ftse-100-higher-2017-05-22)

(http://www.marketwatch.com/story/miners-oil-shares-lead-the-ftse-100-higher-2017-05-22)The dollar was flat, and lower against the euro after German Chancellor Angela Merkel reportedly said because of European Central Bank policies, the weaker euro has made German products cheaper (http://www.marketwatch.com/story/pound-declines-after-shift-in-uk-election-polls-euro-climbs-2017-05-22).

Read: This is the 'bad' kind of dollar weakness (http://www.marketwatch.com/story/this-is-the-bad-kind-of-dollar-weakness-2017-05-22)

Gold prices settled up 0.6% (http://www.marketwatch.com/story/gold-keeps-rally-going-as-dollar-eases-stocks-churn-2017-05-22) at $1,246.40 an ounce, a three-week high (http://www.marketwatch.com/story/gold-keeps-rally-going-as-dollar-eases-stocks-churn-2017-05-22). West Texas Intermediate oil prices rose 0.8% to settle at $50.73 a barrel (http://www.marketwatch.com/story/oil-prices-climb-as-investors-wait-for-opec-meeting-2017-05-22) on an expected production cut from the Organization of the Petroleum Exporting Countries.

Read:4 potential outcomes for OPEC's crucial meeting (http://www.marketwatch.com/story/4-potential-outcomes-for-opecs-crucial-meeting-2017-05-19)

--Barbara Kollmeyer in Madrid contributed to this article

(END) Dow Jones Newswires

May 22, 2017 16:36 ET (20:36 GMT)

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