Bargain Hunting May Contribute To Initial Rebound On Wall Street

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

Bargain hunting may contribute to initial strength on Wall Street, as traders look to pick up stocks at reduced levels.

The Nasdaq and the S&P 500 have closed lower for six consecutive session, following to their lowest levels in two months.

However, other recount rebound attempts have fallen short, as buying interest fades amid ongoing concerns about the outlook for interest rates.

Trades may also be reluctant to make significant moves ahead of the release of several key U.S. economic reports, including reports on new home sales, durable goods orders and personal income and spending.

The Commerce Department’s personal income and spending report includes readings on inflation said to be preferred by the Federal Reserve.

Earnings season also starts to pick up steam this week, with Tesla (TSLA), Boeing (BA), IBM (IBM), Caterpillar (CAT), Honeywell (HON), Alphabet (GOOGL), Intel (INTC), Microsoft (MSFT), Chevron (CVX) and Exxon Mobil (XOM) among the companies due to report their quarterly results.

With technology stocks under pressure, the Nasdaq showed a substantial move to the downside during trading on Friday, extending its recent losing streak. The S&P 500 also saw further downside, while the narrower Dow bucked the downtrend.

The Nasdaq plunged 319.49 points or 2.1 percent to 15,282.01, closing lower for the sixth straight session and tumbling to its lowest closing level in well over two months.

The S&P 500 also closed lower for the sixth straight day, slumping 43.89 points or 0.9 percent to a two-month closing low of 4,967.23.

Meanwhile, the Dow added to the slim gain posted in the previous session, climbing 211.02 points or 0.6 percent to 37,986.40.

For the week, the tech-heavy Nasdaq cratered by 5.5 percent and the S&P 500 dove by 3.1 percent, while the Dow crept slightly higher.

The steep drop by the Nasdaq partly reflected a nosedive by shares of Netflix (NFLX), with the streaming giant plunging by 9.1 percent.

Netflix came under pressure after reporting better than expected first quarter results but providing disappointing revenue guidance.

AI darling Nvidia (NVDA) also plummeted by 10.0 percent on the day, contributing to significant weakness in the semiconductor sector.

Reflecting the weakness in the sector, the Philadelphia Semiconductor Index dove by 4.1 percent to its lowest closing level since early February.

Considerable weakness among computer hardware stocks also weighed on the Nasdaq, with the NYSE Arca Computer Hardware Index tumbling by 3.7 percent to its lowest closing level in well over a month.

Outside of the tech sector, retail stocks also came under pressure on the day, dragging the Dow Jones U.S. Retail Index down by 1.5 percent.

Meanwhile, the Dow benefitted from a notable advance by shares of American Express, with the financial services giant surging by 6.2 percent.

The jump by American Express came after the company reported first quarter results that exceeded expectations on both the top and bottom lines.

Banking stocks also turned in a strong performance on the day, driving the KBW Bank Index up by 2.9 percent.

Interest rate-sensitive utilities stocks also moved notably higher amid a pullback by treasury yields, resulting in a 1.8 percent jump by the Dow Jones Utility Average.

An increase by the price of crude oil also contributed to strength among energy stocks after Israel launched retaliatory strikes against Iran.

Crude oil soared overnight but gave back ground after Iranian state media downplayed the attacks, saying explosions heard in Isfahan were a result of the activation of Iran’s air defense systems.

Commodity, Currency Markets

Crude oil futures are falling $0.46 to $82.68 a barrel after climbing $0.41 to $83.14 a barrel last Friday. Meanwhile, after rising $15.80 to $2,413.80 an ounce in the previous session, gold futures are plummeting $54.80 to $2,359.20 an ounce.

On the currency front, the U.S. dollar is trading at 154.70 yen versus the 154.64 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0642 compared to last Friday’s $1.0656.

Asia

Asian stocks rebounded on Monday, while the dollar, oil and gold all pulled back from their recent highs as fears of a wider conflict in the Middle East ebbed.

Investors gravitated back towards riskier assets after Iran played down Israel’s reported retaliatory attacks on its soil.

Meanwhile, a continued drop in oil prices on growth concerns and signs of rising inventory in the United States helped ease investor concerns surrounding inflation and interest rates.

China’s Shanghai Composite Index ended down 0.7 percent, at 3,044.60, giving up early gains as the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged. Electric-vehicle makers declined as an escalating price war raised concerns over margins.

Hong Kong’s Hang Seng Index rallied 1.8 percent 16,511.69 after China’s market regulator said it would facilitate Hong Kong listings by leading Chinese firms and expand the Stock Connect cross-border investment scheme.

The China Securities Regulatory Commission said ‘it is necessary to consolidate and enhance Hong Kong’s status as an international financial center’.

Japanese shares ended sharply higher as the yen weakened further ahead of upcoming Bank of Japan’s policy review.

The Nikkei 225 Index jumped 1.0 percent to 37,438.61, after having fallen 2.7 percent in its worst session in more than a year and a half on Friday.

The broader Topix Index settled 1.4 percent higher at 2,662.46 even as chip-related stocks tumbled after big technology stocks logged their worst week since the COVID crash in 2020. Tokyo Electron and Advantest lost 3-4 percent.

Seoul stocks climbed, with the Kospi surging 1.5 percent to 2,629.44. POSCO Holdings jumped 2.2 percent after the company announced various measures to reduce costs amid a slowdown in the global steel and battery industries.

Australian markets advanced, led by financials and mining stocks. The benchmark S&P ASX 200 Index climbed 1.1 percent to 7,649.20 ahead of key inflation data due on Wednesday. The broader All Ordinaries index gained 1.1 percent to close at 7,902.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index closed up 0.5 percent at 11,852.80.

Europe

European stocks have mostly higher on Monday as fears of a wider Middle East conflict ebb and a continued decline in oil prices helped ease concerns around inflation and the outlook for interest rates.

Investors’ risk appetitive received a boost after Iran and Israel completed “measured” counterattacks that were calibrated to avoid any casualties.

It is now becoming clear that both countries are not interested in an actual war, which could result in further escalation in the conflict.

Beyond geopolitical tensions, investors looked ahead to the release of a slew of U.S. economic data and prominent tech earnings this week for directional cues.

While the U.K.’s FTSE 100 Index has shot up by 1.6 percent, the German DAX Index is up by 0.5 percent and the French CAC 40 Index is up by 0.2 percent.

Retail stocks traded higher in London after positive comments from RBC Capital Markets.

Marks & Spencer rallied 3.3 percent, Ocado, jumped 5.5 percent and Sainsbury added 3.8 percent.

Tesco climbed 2.8 percent after launching the first tranche of the £1 billion share buyback it promised at its results.

Tyman shares soared 30 percent. The doors and windows supplier has agreed to be bought by US metal window and door manufacturer Quanex in a £788m cash and stock deal.

Hipgnosis Songs Fund surged 9.7 percent as Blackstone made a potential offer to buy the troubled music rights investor for about $1.5 billion.

U.S. Economic Reports

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