Futures Pointing To Initial Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to give back ground following the strong upward move seen last Friday.

Profit taking may contribute to initial weakness on Wall Street, as some traders look to cash in on the strong gains posted in the previous session.

U.S. stocks rallied on Friday, lifting the major averages to a firm close, as upbeat non-farm payroll data helped offset concerns about Middle East tensions and prompted investors to indulge in some brisk buying at several counters from across various sectors.

The Dow settled at a fresh record high at 42,352.75, gaining 341.16 points or 0.8 percent, the S&P 500 closed up 51.13 points or 0.9 percent at 5,751.07, and the Nasdaq jumped 219.37 points or 1.2 percent to settle at 18,137.85.

NVIDIA Corporation, Amazon, Meta Platforms, Berkshire Hathway, JP Morgan Chase, Exxon Mobil, Oracle Corporation, Bank of America, Netflix, Salesforce, IBM, GE Aerospace, American Express, Morgan Stanley, Walt Disney, Uber Technologies and Starbucks Corporation climbed 1 to 4 percent.

Data from the Labor Department showed that non-farm payroll employment jumped by 254,000 jobs in September after climbing by an upwardly revised 159,000 jobs in August. Economists had expected employment to rise by 140,000 jobs compared to the addition of 142,000 jobs originally reported for the previous month.

The report also showed the unemployment rate edged down to 4.1 percent in September from 4.2 percent in August. Economists had expected the unemployment rate to remain unchanged.

The stronger than expected jobs growth eased concerns about the economic outlook but dashed hopes of aggressive rate cuts in the coming months.

The stronger than expected jobs data has raised grounds for an argument for a smaller rate cut at the next Fed decision in November, according to Bill Adams, Chief Economist for Comercia Bank.

Gina Bolvin, President of Bolvin Wealth Management Group is of the view that the strong jobs report lowers expectations for a 0.5 percent basis point cut in November. Bolvin says that with oil prices surging higher due to Middle East tensions, and average hourly earnings rising, the Fed may worry about inflation rearing its ugly head.

Jamie Cox, Managing Partner for Harris Financial Group, is also of the view that it will be hard to justify a 0.5 percent rate cut in November with employment data like this.

Jeffrey Roach, Chief Economist for LPL Financial feels the solid jobs data increases the odds that the economy will continue to grow above the trend in the next quarter, and that the Fed will cut by a quarter point at the next few meetings.

Commodity, Currency Markets

Crude oil futures are jumping $1.21 to $75.59 a barrel after climbing $0.67 to $74.36 a barrel last Friday. Meanwhile, after falling $11.40 to $2,667.80 an ounce in the previous session, gold futures are inching up $1 to $2,668.80 an ounce.

On the currency front, the U.S. dollar is trading at 148.18 yen versus the 148.70 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0975 compared to last Friday’s $1.0974.

Asia

Asian stocks rallied on Monday and the dollar hit a fresh seven-week peak on the yen after robust U.S. jobs data signaled economic resilience but prompted traders to pare bets on aggressive Federal Reserve interest rate cuts.

After Friday’s blowout payrolls report, traders now price in only a quarter-point cut in interest rates at the Federal Reserve’s next policy announcement on November 7, with a small chance that the policy rate stays unchanged.

U.S. Treasury yields touched two-month highs, denting demand for bullion. Oil prices rose in Asian trading as Israel bombed targets in Lebanon and the Gaza Strip, with Monday marking one year since the Hamas attack that triggered war.

Markets in mainland China remained closed until Tuesday for the Golden Week break.

Hong Kong’s Hang Seng Index surged 1.6 percent to 23,099.78, extending a three-week rally to hit a 32-month high after Citi and Goldman Sachs joined peers Morgan Stanley and UBS in raising their targets for key China indices.

Japanese stocks led regional gains, and the yen slumped against the dollar after Japan’s top currency diplomat, Atsushi Mimura, warned against speculative moves in the currency market.

The Nikkei 225 Index jumped 1.8 percent to 39,332.74, while the broader Topix Index settled 1.7 percent higher at 2,739.39.

Financials outperformed, with Resona Holdings surging 8.7 percent supported by a rise in Japanese government bond yields.

Tech-related stocks such as SoftBank Group, Advantest and Screen Holdings climbed 2-3 percent.

Seoul stocks posted strong gains, with chip and battery shares pacing the gainers. The Kospi surged 1.6 percent to 2,610.38.

LG Energy Solution soared 4.1 percent on hopes of demand amid Tesla’s expected reveal of its long-awaited robotaxi project.

Australian markets rose notably despite a public holiday in parts of the nation. The benchmark S&P/ASX 200 Index climbed 0.7 percent to 8,205.40, led by financials and technology stocks. The broader All Ordinaries Index closed up 0.7 percent at 8,479.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.2 percent to 12,596.87.

Europe

European stocks were subdued on Monday due to pressure from higher bond yields following robust U.S. jobs data released last week.

Sentiment was also dented after official data showed Germany’s factory orders declined at a faster-than-expected pace in August.

According to preliminary figures from data Destatis, incoming new orders contracted 5.8 percent on a monthly basis in August, reversing July’s upwardly revised 3.9 percent expansion. Orders were expected to fall 1.9 percent.

Further, this was the steepest decline since January, when orders had fallen 10.9 percent.

Separate data from Eurostat revealed that Eurozone retail sales volume rose 0.2 percent month-on-month in August, matching expectations.

The pan European STOXX 600 dipped 0.3 percent to 516.91 after rising 0.4 percent on Friday.

The German DAX gave up half a percent and France’s CAC 40 slipped 0.2 percent while the U.K.’s FTSE 100 was little changed with a positive bias.

Telecom Italia S.p.A. fell 1.3 percent after its board gave the mandate to its CEO Pietro Labriola to negotiate exclusive offer, regarding the purchase of TI Sparkle S.p.A., received from the Ministry of Economy and Finance and Retelit S.p.A.

Cartier owner Richemont added 0.6 percent after agreeing to sell its struggling digital business Yoox Net-a-Porter to online retailer Mytheresa.

Sirius Real Estate dropped 1.1 percent. The British property company that owns and operates branded business and industrial parks said its rent roll for the first half increased 14.9 percent from last year, partly helped by the ongoing asset acquisition program.

3i Infrastructure gained about 1 percent after it received a binding offer for its approximately 33 percent stake in Valorem, an independent European renewable energy developer and power producer, from funds managed by AIP Management P/S and from certain other co-investors.

Heidelberg Materials rose half a percent after a report that India’s Adani Group has entered into talks to acquire the German company’s Indian cement operations in a deal that could be worth about $1.2 billion.

U.S. Economic News

Minneapolis Federal Reserve President Neel Kashkari is scheduled to participate in a moderated question-and-answer session before the Bank Holding Company Association Fall Seminar at 1:50 pm ET.

At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of August. Consumer credit is expected to increase by $12.0 billion.

Atlanta Federal Reserve President Raphael Bostic is scheduled to moderate a “Dynamic Business of Professional Sports” conversation before the Atlanta Fed’s Leading Voice Series at 6 pm ET.

St. Louis Federal Reserve President Alberto Musalem is due to speak on the U.S. economy and monetary policy and participate in a moderated conversation before the Money Marketeers of New York University Inc. at 6:30 pm ET.