Futures Pointing To Modestly Higher Open On Wall Street

The major U.S. index futures are currently pointing to a modestly higher open on Monday, with stocks likely to move to the upside after ending last Friday’s trading narrowly mixed.

Stocks may benefit from optimism about the outlook for the economy following the Federal Reserve’s interest rate cut last week.

The Fed is expected to continue lowering rates in the coming months amid signs of slowing inflation even as the economy remains relatively strong.

Stocks moved mostly lower early in the session on Friday but regained ground over the course of the trading day. The major averages climbed well off their worst levels of the day before eventually closing narrowly mixed.

While the Dow inched up 38.17 points or 0.1 percent to a new record closing high of 42,063.36, the S&P 500 slipped 11.09 points or 0.2 percent to 5,702.55 and the Nasdaq fell 65.66 points or 0.4 percent to 17,948.32.

Even with the mixed performance on the day, the major averages all posted strong gains for the week. The Dow shot up by 1.6 percent, while the Nasdaq and the S&P 500 jumped by 1.5 percent and 1.4 percent, respectively.

The early weakness on Wall Street partly reflected profit taking, with some traders cashing in on the significant rally seen during trading on Thursday.

Stocks moved sharply higher on Thursday amid a positive reaction to the Federal Reserve’s decision to slash interest rates by half a percentage point.

Selling pressure waned over the course of the session, however, as traders seemed reluctant to make more significant moves as they question what the next catalyst for the markets will be now that the Fed’s first rate cut is in the rearview mirror.

A lack of major U.S. economic data may also have kept some traders on the sidelines ahead of the release of several key reports next week.

While the Fed has already signaled plans to continue lowering rates in the coming months, the data could still impact market sentiment.

Reports on durable goods orders, new home sales and consumer confidence are likely to attract attention next week along with a report on personal income and spending that includes the Fed’s preferred inflation gauge.

Despite the recovery attempt by the broader markets, transportation stocks continued to see substantial weakness, dragging the Dow Jones Transportation Average down by 3.5 percent. The index ended Thursday’s session at its best closing level in over a year.

A steep drop by shares of FedEx (FDX) weighed on the sector, with the delivery giant plunging by 15.2 percent after reporting disappointing fiscal first quarter earnings and lowering its full-year guidance.

Housing stocks also showed a significant move to the downside on the day, resulting in a 2.3 percent slump by the Philadelphia Housing Sector Index.

Steel and semiconductor stocks also saw considerable weakness, while gold and computer hardware stocks showed strong moves to the upside.

Commodity, Currency Markets

Crude oil futures are edging down $0.02 to $70.98 a barrel after slipping $0.16 to $71 a barrel last Friday. Meanwhile, after surging $31.60 to $2,646.20 an ounce in the previous session, gold futures are inching up $1.80 to $2,648 an ounce.

On the currency front, the U.S. dollar is trading at 143.82 yen versus the 143.91 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1116 compared to last Friday’s $1.1162.

Asia

Asian stocks ended mixed on Monday as tensions escalated in the Middle East and China’s central bank lowered a short-term policy rate and pumped more liquidity into the financial system in a bid to boost the world’s second-largest economy.

The dollar held steady in Asian trading, while gold reached a new record high ahead of key U.S. economic data, speeches from Federal Reserve officials and central bank meetings in Australia, Sweden and Switzerland due this week.

Fed Governor Christopher Waller said on Friday that inflation is falling more quickly than expected, giving the U.S. central bank space to ease more in the coming months.

Oil extended last week’s rally as the Israel-Hezbollah conflict appeared to escalate. Israel’s military pounded targets in south and east Lebanon today and said more strikes were coming.

China’s Shanghai Composite Index rose 0.4 percent to 2,748.92 after a key rate decision from the country’s central bank and ahead of a rare briefing on the economy Tuesday by three top financial regulators, with markets expecting fresh stimulus to resuscitate China’s growth.

Hong Kong’s Hang Seng Index ended marginally lower at 18,247.11, giving up early gains after reports suggested the U.S. Department of Commerce is preparing to propose a ban on the use of Chinese software and hardware in connected and autonomous vehicles on American roads, citing national security concerns.

Japanese markets were closed for a holiday. Seoul stocks rose modestly to extend gains for a fifth day running as tech stocks surged ahead of U.S. chipmaker Micron’s earnings release.

The Kospi gained 0.3 percent to close at 2,602.01. SK Hynix rallied 3.1 percent and Naver jumped 4.3 percent.

Australian markets snapped a seven-day winning streak ahead of a Reserve Bank of Australia policy meeting due on Tuesday, with no change in interest rates expected.

The benchmark S&P/ASX200 Index dropped 0.7 percent to 8,152.90, while the broader All Ordinaries Index settled 0.6 percent lower at 8,384.20.

Across the Tasman, New Zealand’s S&P/NZX-50 Index closed 0.6 percent lower at 12,404.17 as Fletcher Building announced its eighth capital raising in two decades.

Europe

European stocks have turned mixed over the course of the session after moving to the downside earlier in the day following weak business activity data and the latest political developments in the region.

Eurozone business activity contracted more than expected in September, with the corresponding PMI falling to 48.9 from 51.0 as both services and manufacturing sectors weakened. Similarly, growth softened across U.K. businesses in September.

In political news, German Chancellor Olaf Scholz’s Social Democratic Party (SPD) has narrowly beaten the far-right Alternative for Germany (AfD) in an election in the east German state of Brandenburg, according to official results released this morning.

In France, Prime Minister Michel Barnier said his new government could increase taxes for big business and the wealthiest to help tackle the budget deficit.

Elsewhere in the U.K., Finance Minister Rachel Reeves said there would be no return to austerity or widespread cuts despite financial challenges.

While the German DAX Index is up by 0.7 percent, the U.K.’s FTSE 100 Index is just below the unchanged line and the French CAC 40 Index is down by 0.1 percent.

In corporate news, UBS Group shares have fallen amid reports that the Swiss financial market regulator FINMA is probing Credit Suisse’s collapse ahead of its merger with UBS.

Commerzbank has also slumped after the German government announced that it would hold on to its 12 percent stake in the lender.

The government “will not, until further notice, sell any additional shares,” the agency responsible for any sales said in a statement Friday. “This also includes sales related to any share buybacks.”

AstraZeneca has also slid after the British drug maker said the overall survival in the TROPION-Breast01 Phase III trial of datopotamab deruxtecan did not achieve statistical significance compared with chemotherapy.

On the other hand, Rightmove has moved notably higher after Australia’s REA Group sweetened its takeover offer for the British property portal.

Scout24 SE, a provider of digital services to the real estate sector, has also surged after announcing a share buyback of up to 150 million euros. The share repurchase is expected to start in the coming weeks and to end in 2026.

U.S. Economic News

Chicago Federal Reserve President Austan Goolsbee is scheduled to participate in a fireside chat on monetary policy and the U.S. economy before the National Association of State Treasurers Annual Conference at 10:15 am ET.

At 1 pm ET, Minneapolis Federal Reserve President Neel Kashkari is due to participate in a moderated question-and-answer session before the Greater Kansas City Chamber of Commerce Leadership Exchange 2024.