U.S. Stocks May Lack Direction Following Last Week's Rally

Following the strong upward move seen last week, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures unchanged.

Traders may be reluctant to make significant moves as they digest last week’s rally, which reflected easing concerns about the outlook for interest rates.

The Federal Reserve’s monetary policy announcement last Wednesday combined with softer than expected jobs data last Friday has led to optimism that the central bank is done raising interest rates.

CME Group’s FedWatch Tool currently indicates the Fed is likely to leave rates unchanged in the coming months until potentially cutting rates in mid-2024.

A lack of major U.S. economic data may also keep traders on the sidelines ahead of remarks by several central bank officials, including Fed Chair Jerome Powell.

Reports on the U.S. trade deficit, initial jobless claims and consumer sentiment may also attract attention in the coming days.

“It’s been a relatively subdued start to trading on Monday and the US is eyeing a similar open, with stock markets struggling to maintain the momentum from the second half of last week,” said Craig Erlam, senior market analyst at OANDA.

Capping off a strong week for the markets, stocks moved considerably higher during the trading session on Friday. The Dow and the S&P 500 closed higher for the fifth straight day, while the tech-heavy Nasdaq extended its winning streak to six sessions.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Nasdaq surged 184.09 points or 1.4 percent to 13,478.28, the S&P 500 jumped 40.56 points or 0.9 percent to 4,358.34 and the Dow advanced 222.24 points or 0.7 percent to 34,061.32.

For the week, the Nasdaq skyrocketed by 6.6 percent, the S&P 500 soared by 5.9 percent and the Dow spiked by 5.1 percent.

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Monday. Japan’s Nikkei 225 Index surged by 2.4 percent, while South Korea’s Kospi spiked by 5.7 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.1 percent, the German DAX Index is down by 0.3 percent and the French CAC 40 Index is down by 0.5 percent.

In commodities trading, crude oil futures are climbing $0.92 to $81.43 a barrel after tumbling $1.95 to $80.51 a barrel last Friday. Meanwhile, after rising $5.70 to $1,999.20 an ounce in the previous session, gold futures are slipping $6.60 to $1,992.60 an ounce.

On the currency front, the U.S. dollar is trading at 149.77 yen versus the 149.39 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0741 compared to last Friday’s $1.0731.

Source: Read Full Article