U.S. Stocks May See Further Upside In Early Trading

Following the advance seen last Friday, stocks may see further upside in early trading on Monday. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.1 percent.

Stocks may continue to benefit from recent upward momentum, which helped lift the S&P 500 and the Nasdaq to new record closing highs last Friday.

Traders remain optimistic about the outlook for the markets even though the Federal Reserve has signaled it plans to begin scaling back its asset purchases later this year.

The Fed’s asset purchase program has helped prop up stocks throughout much of the coronavirus pandemic, but traders seem to believe the strength of the economy will provide continued support.

Fed Chair Jerome Powell’s comments last Friday suggesting interest rate hikes remain a long way off may also increase the appeal of stocks.

Trading activity may be somewhat subdued, however, as investors look ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Reports on consumer confidence, manufacturing and service sector activity, and factory orders may also attract attention in the coming days.

Shortly after the start of trading, the National Association of Realtors is scheduled to release its report on pending home sales in the month of July. Existing home sales are expected to rise by 0.4 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

U.S. stocks closed firmly in positive territory on Friday, reacting to Federal Reserve Chairman Jerome Powell’s remarks at the Jackson Hole symposium. The major averages all posted strong gains, with the S&P 500 and the Nasdaq moving on to post fresh record closing highs.

The Dow ended the session with a gain of 242.68 points or 0.7 percent at 35,455.80, after climbing to a high of 35,479.18. The S&P 500 ended stronger by 39.37 points or 0.9 percent at 4,509.37, slightly off a new record intraday high of 4,513.22. The Nasdaq settled at 15,129.50, jumping 183.69 points or 1.2 percent.

For the week, the Dow notched a gain of about 1 percent, while the S&P 500 and the Nasdaq surged 1.5 percent and 2.8 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index edged up by 0.2 percent.

The major European markets have also moved to the upside, although the U.K. markets are closed for a holiday. While the French has risen by 0.2 percent, the German DAX Index has crept up by 0.1 percent.

In commodities trading, crude oil futures are inching up $0.02 to $68.76 barrel after jumping $1.32 to $68.74 a barrel last Friday. Meanwhile, after surging $24.30 to $1,819.50 an ounce in the previous session, gold futures are edging down $0.40 to $1,819.10 an ounce.

On the currency front, the U.S. dollar is trading at 109.86 yen versus the 109.84 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1797 compared to last Friday’s $1.1795.

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