U.S. Stocks May Move To The Downside Amid Tech Sector Weakness

After ending last Friday’s choppy trading session mixed, stocks are likely to move mostly lower in early trading on Monday. The major index futures are currently pointing to initial weakness on Wall Street, with the S&P 500 futures down by 0.3 percent.

Weakness among technology stocks may weigh on the markets, as reflected by the 0.5 percent drop by the Nasdaq 100 futures.

Shares of Intel (INTC) and Advanced Micro Devices (AMD) are likely to come under pressure after a report from the Financial Times said China has introduced new guidelines to phase the company’s microprocessors out of government PCs and servers.

As part of a campaign to replace foreign technology with homegrown solutions, FT said stricter government procurement guidance also seeks to sideline Microsoft’s (MSFT) Windows operating system and foreign-made database software in favor of domestic options.

News that Atlanta Federal Reserve President Raphael Bostic has scaled back his forecast to just one interest rate cut this year after previously projecting two rate cuts may also generate some negative sentiment.

Projections provided along with the Fed’s monetary policy announcement last week suggested Fed officials still expect three rate cuts this year.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of some key economic data in the coming days.

Traders are likely to keep an eye on reports on durable goods orders, consumer confidence and pending home sales, although a report on personal income and spending that includes readings on inflation said to be preferred by the Fed will be released when the markets are closed for Good Friday.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on new home sales in the month of February.

Economists expect new home sales to surge to an annual rate of 680,000 in February after jumping to a rate of 661,000 in January.

After trending higher for several sessions, stocks turned in a relatively lackluster performance during trading on Friday. The major averages fluctuated over the course of the session before eventually ending the day mixed.

While the Nasdaq inched up 26.98 points or 0.2 percent to a new record closing high of 16,428.82, the S&P 500 edged down 7.35 points or 0.1 percent to 5,234.18 and the Dow slid 305.47 points or 0.8 percent to 39,475.90.

Despite the mixed performance on the day, the major averages all moved sharply higher for the week. The Nasdaq spiked by 2.9 percent, the S&P 500 surged by 2.3 percent and the Dow jumped by 2.0 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index slumped by 1.2 percent, while China’s Shanghai Composite Index slid by 0.7 percent.

Most European stocks have also moved to the downside on the day. While the German DAX Index is nearly unchanged, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

In commodities trading, crude oil futures are rising $0.29 to $80.92 a barrel after falling $0.44 to $80.63 a barrel last Friday. Meanwhile, after tumbling $24.70 to $2,160 an ounce in the previous session, gold futures are climbing $16.30 to $2,176.30 an ounce.

On the currency front, the U.S. dollar is trading at 151.18 yen versus the 151.41 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0828 compared to last Friday’s $1.0808.

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