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

Stocks moved sharply higher to close out the previous week but may give back some ground in early trading on Monday. The major index futures are currently pointing to a modestly lower open for the markets, with the S&P 500 futures down by 0.2 percent.

Traders may look to cash in on the rally seen over the two previous sessions amid fading optimism about the likelihood the Federal Reserve will cut interest rates in March.

Fed Chair Jerome Powell reiterated the central bank is unlikely to cut interest rates next month during an interview with “60 Minutes” on Sunday.

Powell suggested the strength of the U.S. economy even amidst elevated rates will allow the Fed to proceed carefully.

“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” Powell said.

“We want to see more evidence that inflation is moving sustainably down to 2 percent,” He added. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”

Following last week’s Fed meeting and Powell’s subsequent comments, the chances of a March rate cut have fallen to just 15.5 percent, according to CME Group’s FedWatch Tool

Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of January.

The ISM’s services PMI is expected to rise to 52.0 in January from 50.6 in December, with a reading above 50 indicating growth in the sector.

Stocks moved sharply higher over the course of the trading day on Friday, extending the recovery rally seen during trading Thursday’s session. The major averages more than offset the steep drop seen on Wednesday, with the Dow and the S&P 500 reaching new record closing highs.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Nasdaq surged 267.31 points or 1.7 percent to 15,628.95, the S&P 500 jumped 52.42 points or 1.1 percent to 4,958.61 and the S&P 500 climbed 134.58 points or 0.4 percent to 38,654.42.

For the week, the Nasdaq shot up by 1.1 percent, while the Dow and the S&P 500 both jumped by 1.4 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index slumped by 1.0 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.4 percent, the German DAX Index is just below the unchanged line and the French CAC 40 Index is down by 0.1 percent.

In commodities trading, crude oil futures are slipping $0.24 to $72.04 a barrel after tumbling $1.54 to 472.28 a barrel last Friday. Meanwhile, after slumping $17.40 to $2,053.70 an ounce in the previous session, gold futures are falling $17.50 to $2,036.20 an ounce.

On the currency front, the U.S. dollar is trading at 148.54 yen versus the 148.38 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0745 compared to last Friday’s $1.0788.