Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction after snapping a nine-week winning streak last week.

Traders may be reluctant to make significant moves ahead of the release of key U.S. inflation data in the coming days.

The Labor Department’s reports on consumer and producer price inflation data could have a significant impact on the look for interest rates.

While the Federal Reserve is widely expected to leave interest rates unchanged when it meets later this month, the data could impact expectations regarding a rate cut in March.

Optimism about a March rate cut have recently waned, although CME Group’s FedWatch Tool currently still indicates a 62.7 percent chance of a decrease.

After trending lower during the past several sessions, stocks saw considerable volatility over the course of the trading day on Friday. The major averages swung back and forth across the unchanged line before eventually closing slightly higher.

The tech-heavy Nasdaq inched up 13.77 points or 0.1 percent to 14,524.07, snapping a five-session losing streak. The Dow also crept up 25.77 points or 0.1 percent to 37,466.11, while the S&P 500 rose 8.56 points or 0.2 percent to 4,697.24 after closing lower for four consecutive sessions.

Despite the uptick on the day, the major averages all moved lower for the first week of the new year. The Nasdaq plunged by 3.3 percent, the S&P 500 slumped by 1.5 percent and the Dow slid by 0.6 percent. With the drop, the major averages moved to the downside for the first time in ten weeks.

The volatility on the day came as traders reacted to the release of some key U.S. economic data, including a closely watched Labor Department report showing stronger than expected job growth in December.

While the data initially raised concerns about the outlook for interest rates, positive sentiment prevailed as traders digested the details of the report, which also showed notable downward revisions to job growth in October and November.

The Labor Department said non-farm payroll employment surged by 216,000 jobs in December compared to economist estimates for an increase of about 170,000 jobs.

At the same time, the increases in employment in October and November were downwardly revised to 105,000 jobs and 173,000 jobs, respectively, reflecting a net downward revision of 71,000 jobs.

“There’s no recession threat in this report, nor any reason for the Fed to worry about overheating,” said FHN Financial Chief Economist Chris Low. “It is as safely down the middle as they come.”

The Institute for Supply Management also released a report showing a bigger than expected slowdown in the pace of U.S. service sector growth.

The ISM said its services PMI fell to 50.6 in December from 52.7 in November. While a reading above 50 still indicates growth, economists had expected the index to show a much more modest decrease to 52.6.

The data also contributed to significant volatility in the bond markets, with the yield on the benchmark ten-year note bouncing back and forth across the unchanged line before closing above 4.0 percent for the first time in over four weeks.

While most of the major sectors showed only modest moves on the day, airline stocks extended Thursday’s rebound, driving the NYSE Arca Airline Index up by 1.9 percent.

Significant strength was also visible among banking stocks, with the KBW Bank Index climbing by 1.6 percent to its best closing level in almost ten months.

Oil service stocks also turned in a strong performance amid a sharp increase by the price of crude oil, resulting in a 1.2 percent gain by the Philadelphia Oil Service Index.

Commodity, Currency Markets

Crude oil futures are plunging $2.63 to $71.18 a barrel after jumping $1.62 to $73.81 a barrel last Friday. Meanwhile, after edging down $0.20 to $2,049.80 an ounce in the previous session, gold futures are sliding $19.80 to $2,030 an ounce.

On the currency front, the U.S. dollar is trading at 144.33 yen versus the 144.63 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.2713 compared to last Friday’s $1.0943.

Asia

Asian stocks moved in a narrow range before closing mostly lower on Monday as Middle East worries persisted, the earnings season loomed, and investors looked ahead to the release of inflation data this week from the U.S., China and Japan for directional cues.

Gold ticked lower and the dollar extended gains as expectations of an early rate cut in the U.S. faded. Oil prices fell more than 1 percent in Asian trading after a substantial cut in official oil pricing to Asia by OPEC+ leader Saudi Arabia.

Japanese markets were xlosed for the Coming-of-Age Day holiday.

Chinese and Hong Kong stocks fell sharply to underperform regional peers as China announced sanctions against five American defense-related companies in response to U.S. arms sales to Taiwan and U.S. sanctions on Chinese companies and individuals.

China’s Shanghai Composite Index dropped 1.4 percent to 2,887.54, while Hong Kong’s Hang Seng Index tumbled 1.9 percent to 16,224.45, dragged down by tech stocks.

Seoul stocks ended lower for the fourth day running ahead of the release of U.S. consumer price inflation and producer price inflation data this week. The Bank of Korea’s rate decision on Thursday was also on investors’ radar. The Kospi dipped 0.4 percent to 2,567.82.

Australian stocks ended at a three-week low ahead of domestic retail sales and inflation data due this week. The benchmark S&P/ASX 200 Index slid half a percent to 7,451.50, while the broader All Ordinaries Index closed 0.5 percent lower at 7,676.80.

Miners led losses as iron ore prices slumped. Technology stocks also weakened, tracking losses in their global peers.

Core Lithium shares slumped 17.4 percent. The miner halted operations and flagged an impairment charge related to its Finiss operations in Northern Territory for the half-year ended December 2023.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index eased 0.1 percent to close at 11,735.42.

Europe

European stocks are turning in a lackluster performance on Monday, with increased geopolitical tensions and fading expectations of an early rate cut in the U.S. keeping investors worried.

Israel struck Hamas and Hezbollah terror facilities in Khan Yunis and Lebanon in overnight strikes, the Israel Defense Forces said earlier today.

The dollar and bond yields remained supported after government data showed U.S. job growth surged unexpectedly in December.

The yields on the European 10-year benchmark note and the German 10-year rose for a third straight session ahead of U.S. consumer price inflation and producer price inflation data due this week.

The U.S. earning season also remains on investors’ radar, with major banks including JPMorgan Chase and Citigroup due to report their financial results on Friday.

While the U.K.’s FTSE 100 Index is down by 0.1 percent, the French CAC 40 Index is up by 0.1 percent and the German DAX Index is up by 0.2 percent.

Shipping giant Maersk has fallen as it announced a significant change in its shipping routes for the foreseeable future in response to the threat posed by Houthi rebels based in Yemen.

Casino shares have also moved lower. The French retail company said that the European Commission has authorized a consortium led by Daniel Kretinsky to take control of the Group as part of the financial restructuring.

Meanwhile, Danish Jewlery maker Pandora has jumped after it reported a 12 percent year-on-year increase in organic sales for the October-December interval.

Evotec, a German drug discovery and development company, has also advanced after announcing progress within the strategic partnership with Bristol Myers Squibb.

Plus500, a fintech company, has soared after announcing that it has delivered its annual results significantly ahead of market expectations.

In economic releases, data showed Germany’s exports and imports rebounded in November. Exports posted a monthly growth of 3.7 percent, reversing a fall of 0.4 percent in October, Destatis reported. Likewise, imports gained 1.9 percent, following a 1.1 percent decrease.

Separate data revealed that Germany’s factory orders rose less than expected in November. Orders climbed 0.3 percent on a monthly basis in November, in contrast to the revised 3.8 percent decline in October. But the pace of expansion was weaker than the expected rate of 1.0 percent.

U.K. job placements declined again at the end of the year, albeit at softer rates as employers remained cautious about hiring, a survey report compiled by S&P Global showed.

Recruitment consultancies registered further decline in hiring but both permanent placements and temp billings decreased at softer rates, the KPMG/REC Report on Jobs said.

U.S. Economic Reports

Atlanta Federal Reserve President Raphael Bostic is scheduled to participate in a moderated conversation on the economic outlook before the Rotary Club of Atlanta at 12:30 pm ET.

At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of November. Consumer credit is expected to increase by $9.0 billion in November after rising by $5.1 billion in October.