U.S. Stocks May Give Back Ground In Early Trading

Stocks are likely to move to the downside in early trading on Monday, giving back ground following the strong upward move seen last Friday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 189 points.

Lingering concerns about the global economy may lead to a pullback on Wall Street after the release of weak Chinese industrial output, retail sales and fixed-asset investment data.

A surprise interest rate cut by China’s central bank has added to concerns about slowing growth in the world’s second largest economy.

Traders may use the economic worries as an opportunity to cash in on last week’s strong gains, which lifted the major averages to their best levels in three months.

Potentially adding to the negative sentiment, the New York Federal Reserve released a report unexpectedly showing a substantial contraction in regional manufacturing activity in the month of August.

The New York Fed said its general business conditions index plummeted to a negative 31.3 in August from a positive 11.1 in July, with a negative reading indicating a contraction in regional manufacturing activity.

Economists had expected the index to show a much more modest decrease to a positive 8.5.

Looking ahead, the New York Fed said firms did not expect much improvement in business conditions over the next six months.

Not long after the start of trading, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of August. The housing market index is expected to remain unchanged at 55.

Following the significant downturn seen over the course of Thursday’s session, stocks showed a strong move back the upside during trading on Friday. With the rally on the day, the major averages reached new three-month closing highs.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 424.38 points or 1.3 percent to 33,761.05, the Nasdaq surged 267.27 points or 2.1 percent to 13,047.19 and the S&P 500 shot up 72.88 points or 1.7 percent to 4,280.15.

For the week, the S&P 500 skyrocketed by 3.3 percent to record its fourth straight weekly gain, while the Nasdaq and the Dow spiked by 3.1 percent and 2.9 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while Hong Kong’s Hang Seng Index slid by 0.7 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the German DAX Index has edged down by 0.1 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent.

In commodities trading, crude oil futures are plunging $4.88 to $87.21 a barrel after tumbling $2.25 to $92.09 a barrel last Friday. Meanwhile, after climbing $8.30 to $1,815.50 an ounce in the previous session, gold futures are falling $18.10 to $1,797.40 an ounce.

On the currency front, the U.S. dollar is trading at 132.72 yen versus the 133.42 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0198 compared to last Friday’s $1.0259.