U.S. Stocks May Move To The Upside Ahead Of Fed Meeting

Following the lackluster performance seen during last Friday’s session, stocks are likely to move to the upside in early trading on Monday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.3 percent.

Stocks may benefit from optimism about the outlook for interest rates ahead of the Federal Reserve’s monetary policy decision on Wednesday.

The Fed is widely expected to continue cutting interest rates, with CME Group’s FedWatch Tool currently indicating a 97.1 percent chance the central bank will lower rates by another 25 basis points.

Traders are likely to pay close attention to the Fed’s accompanying statement as well as officials’ latest economic projections, including their forecasts for rates.

Recent data showing inflation remains sticky has led to some worries the Fed will lower rates slower than previously anticipated next year.

In U.S. economic news, the Federal Reserve Bank of New York released a report showing a sharp pullback by its reading on regional manufacturing activity in the month of December.

The New York Fed said its general business conditions index plummeted to 0.2 in December after spiking to 31.2 in November, although a positive reading still indicates growth. Economists had expected the index to tumble to 12.0.

Looking ahead, the New York Fed said firms remained fairly optimistic conditions would continue to improve in the months ahead, but the index for future business activity slid to 24.6 in December from 33.2 in November.

After failing to sustain an early move to the upside, stocks showed a lack of direction over the course of the trading session on Friday. The major averages bounced back and forth across the unchanged line before eventually closing narrowly mixed.

The Dow dipped 86.06 points or 0.2 percent to 43,828.06, closing lower for the seventh consecutive session. The S&P 500 edged down 0.16 points or less than a tenth of a percent to 6,051.09, while the tech-heavy Nasdaq inched up 23.88 points or 0.1 percent to 19,926.72.

The major averages also turned in a mixed performance for the week. While the Nasdaq rose by 0.3 percent, the S&P 500 slid by 0.6 percent and the narrower Dow tumbled by 1.8 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index closed just below the unchanged and China’s Shanghai Composite Index edged down by 0.2 percent, while Hong Kong’s Hang Seng Index slid by 0.9 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index is down by 0.9 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both down by 0.4 percent.

In commodities trading, crude oil futures are falling $0.65 to $70.64 a barrel after jumping $1.27 to $71.29 a barrel last Friday. Meanwhile, after plunging $33.60 to $2,675.80 an ounce in the previous session, gold futures are inching up $3.80 to $2,679.60 an ounce.

On the currency front, the U.S. dollar is trading at 154.03 yen versus the 153.65 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0498 compared to last Friday’s $1.0501.