U.S. Stocks May Regain Ground Following Recent Weakness

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to regain ground following the sell-off seen last week.

Traders may look to pick up stocks at reduced levels following the steep drop seen last week, which reflected ongoing concerns about the outlook for interest rates and the conflict in the Middle East.

The Dow slumped to its lowest closing level in seven months last Friday, while the S&P 500 slid to a new five-month closing low.

Overall trading activity may be somewhat subdued, however, as some traders may stick to the sidelines ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

With the Fed widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the potential for further rate hikes.

Following the Fed announcement, the Labor Department’s closely watched monthly employment report is likely to move into the spotlight later in the week.

After moving sharply lower over the two previous sessions, the major U.S. stock indexes turned in a mixed performance during trading on Friday.

While the Dow and the S&P 500 extended the recent downward move, the tech-heavy Nasdaq managed to regain some ground.

The Nasdaq pulled back well off its best levels of the day but still closed up 47.41 points or 0.4 percent at 12,643.01, bouncing off its lowest closing level in five months.

Meanwhile, the Dow tumbled 366.71 points or 1.1 percent to 32,417.59 and the S&P 500 fell 19.86 points or 0.5 percent to 4,117.37.

Despite the mixed performance on the day, the major averages all moved sharply lower for the week. The Dow tumbled by 2.1 percent, while the S&P 500 and the Nasdaq plunged by 2.5 percent and 2.6 percent, respectively.

The rebound by the Nasdaq partly reflected a positive reaction to earnings news from Amazon (AMZN), with the online retail giant spiking by 6.8 percent after reporting better than expected third quarter results.

Semiconductor giant Intel (INTC) also soared by 9.3 percent after reporting third quarter results that exceeded analyst estimates and providing upbeat guidance.

Meanwhile, a steep drop by shares of Chevron (CVX) weighed on the Dow, as the energy giant plunged by 6.7 percent after reporting third quarter earnings that missed analyst estimates.

Traders were also digesting a Commerce Department report showing its reading on consumer prices rose by 0.4 percent in September, matching the increase in August. Economists had expected prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices increased by 0.3 percent in September after inching up by 0.1 percent in the previous month. The core price growth matched economist estimates.

The annual rate of consumer price growth was unchanged at 3.4 percent, while the annual rate of core consumer price growth slipped to 3.7 percent in September from 3.8 percent in August. Both year-over-year readings matched expectations.

“Despite the larger than expected monthly increase in core prices, the Fed is widely expected to keep the federal funds rate unchanged at the conclusion of their regularly scheduled meeting next Wednesday,” said Sam Millette, Senior Market Strategist for Commonwealth Financial Network.

Pharmaceutical stocks showed a substantial move to the downside, dragging the NYSE Arca Pharmaceutical Index down by 3.2 percent to its lowest closing level in over three months.

U.S.-listed shares of Sanofi (SNY) plummeted after the French pharmaceutical company reported weaker than expected third quarter results and provided disappointing guidance.

Considerable weakness was also visible among biotechnology stocks, as reflected by the 2.6 percent slump by the NYSE Arca Biotechnology Index.

Banking stocks also came under pressure over the course of the session, with the KBW Bank Index tumbling by 2.3percent.

JPMorgan (JPM) helped to lead the sector lower after the financial giant revealed CEO Jamie Dimon and his family plan to sell 1 million shares of the company’s stock beginning next year.

Telecom, airline and utilities stocks also saw notable weakness, while retail stocks turned in a strong performance following the upbeat earnings news from Amazon.

Gold stocks also moved sharply higher amid an increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are tumbling $1.59 to $83.95 a barrel after surging $2.33 to $85.54 a barrel last Friday. Meanwhile, after inching up $1.10 to $1,998.50 an ounce in the previous session, gold futures are rising $10.10 to $2,008.60 an ounce.

On the currency front, the U.S. dollar is trading at 149.84 yen versus the 149.66 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0587 compared to last Friday’s $1.0565.

Asia

Asian stocks ended mixed on Monday as the conflict in the Middle East continued and investors looked for cues from a slew of central bank meetings due this week.

The U.S. Federal Reserve, Bank of England and Bank of Japan are set to hold their monetary policy meetings this week, with economists expecting a status quo policy from the U.S. central bank and the U.K. central bank.

Analysts expect the Bank of Japan to potentially further tweak its yield curve control (YCC) policy when it meets on Tuesday.

Meanwhile, Israeli troops have entered the Gaza Strip for the first time in nearly two decades, but it is unclear whether the maneuvers mark the official start of an invasion.

The dollar held steady in cautious trade ahead of global manufacturing data due this week.

Gold consolidated near multi-month highs above the key $2,000 per level, while crude prices fell more than 1 percent in Asian trading on easing Middle East worries.

Chinese shares recovered from an early slide to close slightly higher, with the benchmark Shanghai Composite Index edging up 0.1 percent to 3,021.55. Hong Kong’s Hang Seng Index ended marginally higher at 17,406.36.

China Evergrande Group shares plunged nearly 10 percent after Hong Kong’s High Court gave the embattled property developer a five-week reprieve to come up with a deal with creditors or face liquidation.

Japanese shares fell sharply as a two-day policy meeting of the BOJ got underway. The Nikkei 225 Index tumbled 1.0 percent to 30,696.96, while the broader Topix Index closed 1.0 percent lower at 2,231.24.

Automakers led losses, with Toyota, Honda, Nissan and Mitsubishi Motors falling 2-4 percent. Healthcare equipment maker Omron lost 15.8 percent after slashing its annual profit forecast.

Seoul stocks reversed course to send modestly higher, with the Kospi closing up 0.3 percent at 2,310.55.

Australian markets fell notably on concerns that the Israel-Hamas war could spill over across the Middle East. Upbeat retail sales data also strengthened expectations the Reserve Bank will hike rates when it meets on November 7.

The benchmark S&P/ASX 200 Index fell 0.8 percent to 6,772.90, marking its lowest level in more than 12 months. The broader All Ordinaries Index dropped 0.8 percent to 6,960.20.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished 0.2 percent lower at 10,741.57.

Europe

European stocks have advanced on Monday ahead of a busy week of earnings, economic data releases and central bank meetings. The Federal Reserve, Bank of Japan and Bank of England are all set to announce their monetary policy decisions this week.

On the earnings front, Apple will unveil its financial results on Thursday after the U.S. closing bell.

The U.S. jobs report due out on Friday is expected to show that employers slowed their hiring pace last month, following robust payroll increases earlier in the year.

Meanwhile, investors shrugged off official data showing the German economy shrank slightly in the third quarter. GDP fell by 0.1 percent sequentially in adjusted terms, the federal statistics office said.

While the German DAX Index has climbed by 0.5 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both up by 0.7 percent.

Swiss firm Clariant AG has rallied after announcing it would acquire Canada’s Lucas Meyer Cosmetics from International Flavors & Fragrances in an all-cash deal for $810 million.

Ascential has also soared in London after the information and analytics firm said it would sell its digital commerce and consumer research units for a combined enterprise value of 1.4 billion pounds ($1.70 billion).

Frasers Group has also moved to the upside as it announced divestment of the IP of Missguided to Chinese clothing giant Shein.

Premier Foods has also risen after buying breakfast brand FUEL10K in a £34 million deal. Reckitt Benckiser has also advanced 1 after launching the first tranche of its share buyback program.

Siemens Energy shares have also jumped. Supervisory Board Chairman Joe Kaeser said in an interview with newspaper Welt am Sonntag that talks with the German government are about state guarantees, not a direct cash injection.

Meanwhile, ArcelorMittal shares have slumped. At least 32 people were killed Saturday when a fire broke out at a mine in Kazakhstan belonging to the global steel giant.

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today.

Stocks In Focus

Shares of SoFi Technologies (SOFI) are seeing significant pre-market strength after the financial services provider reported better than expected third quarter revenues and raised its full-year guidance.

Fast food giant McDonald’s (MCD) is also likely to move to the upside after reporting third quarter results that exceeded analyst estimates on both the top and bottom lines.

Meanwhile, shares of Check Point Software (CHKP) are seeing pre-market weakness even though the Israel-based cybersecurity company reported third quarter results that exceeded analyst estimates.