Profit Taking May Contribute To Initial Pullback On Wall Street

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

Profit taking may contribute to initial weakness on Wall Street, as lingering concerns about the Russia-Ukraine conflict and higher oil prices inspire some traders to cash in on last week’s gains.

Recent profit taking efforts have fallen short, however, as stocks moved lower at the start of several of the past few sessions only to move sharply higher over the course of the trading day.

The rally seen last week helped lift the major averages well off their recent lows, although they also remain well off their record highs.

Traders are also likely to keep an eye on the latest developments in Ukraine, with peace talks with Russia failing to make substantial progress on key issues.

Nonetheless, overall trading activity may be somewhat subdued, as a lack of major U.S. economic data keeps some traders on the sidelines.

Reports on durable goods orders, new and pending home sales and weekly jobless claims may attract attention in the coming days.

The major U.S. stock indexes moved in opposite directions early in the session on Friday but all moved notably higher over the course of the trading day. The upward move extended the rally seen over the three previous sessions.

The major averages finished the session at their best levels of the day. The Dow climbed 274.17 points or 0.8 percent to 34,754.93, the Nasdaq surged 279.06 points or 2.1 percent to 13,893.84 and the S&P 500 jumped 51.45 points or 1.2 percent to 4,463.12.

For the week, the Nasdaq soared by 8.2 percent, while the S&P 500 and the Dow spiked by 6.2 percent and 5.5 percent, respectively.

The markets continued to benefit from recent upward momentum, with the major averages recovering from the sell-off sparked by Russia’s invasion of Ukraine.

The tech-heavy Nasdaq had ended Monday’s trading at its lowest closing level in over a year, while the S&P 500 finished the day just above the nearly nine-month closing low set earlier this month.

Traders also kept an eye on the latest developments in the Russia-Ukraine war, as ongoing peace talks have thus far failed to yield a breakthrough.

President Joe Biden spoke with Chinese President Xi Jinping about the conflict this morning, with the White House saying Biden described the implications and consequences if China provides material support to Russia.

In U.S. economic news, the National Association of Realtors released a report showing a sharp pullback in U.S. existing home sales in the month of February.

NAR said existing home sales plunged by 7.2 percent to an annual rate of 6.02 million in February after surging by 6.6 percent to a revised rate of 6.49 million in January.

Economists had expected existing home sales to tumble by 6.2 percent to a rate of 6.10 million from the 6.50 million originally reported for the previous month.

The steeper than expected pullback came after existing home sales reached their highest annual rate in a year in January.

A separate report from the Conference Board showed its U.S. leading economic index rose by slightly more than expected in the month of February.

The Conference Board said its leading economic index increased by 0.3 percent in February after falling by a revised 0.5 percent in January.

Economists had expected the leading economic index to edge up by 0.2 percent compared to the 0.3 percent drop originally reported for the previous month.

Computer hardware stocks extended the substantial rebound seen over the past several sessions, driving the NYSE Arca Computer Hardware Index up by 2.8 percent. The index continued to recover after ending last Monday’s trading at its lowest closing level in almost a year.

Continued strength was also visible among tobacco stocks, as reflected by the 2.8 percent spike by the NYSE Arca Tobacco Index.

Semiconductor stocks also turned in a strong performance on the day, resulting in a 2 percent jump by the Philadelphia Semiconductor Index,

Housing, networking and biotechnology stocks also showed notable moves to the upside, while utilities stocks bucked the uptrend.

Commodity, Currency Markets

Crude oil futures are spiking $4.42 to $109.12 a barrel after jumping $1.72 to $104.70 a barrel last Friday. Meanwhile, after falling $13.90 to $1,929.30 an ounce in the previous session, gold futures are slipping $2.90 to $1,926.40 an ounce.

On the currency front, the U.S. dollar is trading at 119.23 yen versus the 119.17 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1036 compared to last Friday’s $1.1051.

Asia

Asian stocks ended flat to slightly lower on Monday, as the war in Ukraine rages on and a high-ranking Federal Reserve official made hawkish remarks on borrowing costs, saying that it is necessary to raise the interest rate by 50 basis points at least once this year. In addition, China’s central bank dashed hopes for an interest rate cut by keeping lending rates unchanged. The Japanese market was closed for a holiday.

Chinese shares ended flat with a positive bias as the People’s Bank of China kept its benchmark interest rate unchanged, raising concerns about whether there would be adequate policy support to spur growth. Hong Kong’s Hang Seng Index fell 191.06 points, or 0.9 percent, to 21,221.34.

Australian markets ended slightly lower. The benchmark S&P/ASX 200 Index slipped 15.90 points, or 0.2 percent, to 7,278.50 as the country imposed an immediate ban on exports of alumina and aluminum ores, including bauxite, to Russia. The broader All Ordinaries Index ended down 12.30 points, or 0.2 percent, at 7,558.90.

Miners and energy stocks rose on stronger iron ore and oil prices. Technology stocks outperformed, with Block Inc. shares climbing over 9 percent. Asset manager Magellan Financial lost 4.3 percent after co-founder Hamish Douglass resigned from the company’s board.

Seoul stocks fell notably to snap a three-day winning streak, weighed down by uncertainty over the Ukraine-Russia conflict and worries over U.S. monetary policy. The Kospi dropped 20.97 points, or 0.8 percent, to close at 2,686.05. Samsung Electronics, SK Hynix, Naver and Kakao shed 1-3 percent.

New Zealand shares ended on a flat note as Russia-Ukraine peace talks dragged on and two of the Fed’s most hawkish policymakers said that the central bank needs to take more aggressive steps to combat inflation. The NZX-50 Index edged up 1.90 points to finish at 12,177.75.

Ebos Group and Vista Group International climbed 2-3 percent, while Auckland International Airport shares fell about 4 percent.

Europe

European stocks are turning in a mixed performance in cautious trading on Monday, with energy stocks outperforming as crude prices jump after Houthi rebels targeted various Saudi Aramco oil and gas sites across the kingdom over the weekend.

Market participants are bracing for more turmoil this week amid reports that EU governments are considering whether to impose an oil embargo on Russia.

While the U.K.’s FTSE 100 Index is up by 0.5 percent, the German DAX Index is down by 0.1 percent and the French CAC 40 Index is down by 0.2 percent.

French gas supplier Air Liquide is moving lower after it joined with Eni, an Italian energy firm, to assess decarbonization solutions in the Mediterranean region of Europe focused on hard-to-abate industrial sectors. Shares of the latter have jumped on higher oil prices.

Miner Antofagasta has surged after it agreed to a deal with Canadian partner Barrick Gold Corp and authorities in Pakistan to exit the Reko Diq mine.

Cloud-based software company SAP SE has fallen. The German company announced that its Chief Financial Officer and Executive Board Member, Luka Mucic, will depart the company on March 31, 2023.

Steel producer Salzgitter Group has shown a notable move to the upside after delivering the best pre-tax result in 13 years.

In economic news, German producer prices continued to accelerate on higher energy prices in February, data published by Destatis showed earlier today.

Producer price inflation accelerated to 25.9 percent in February from 25.0 percent in January. Nonetheless, this was slightly slower than the expected growth of 26.2 percent.

On a monthly basis, producer prices gained 1.4 percent, slower than the 2.2 percent increase in the previous month as well as economists’ forecast of 1.7 percent.

U.S. Economic Reports

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

Stocks In Focus

Shares of Anaplan (PLAN) are soaring in pre-market trading after the business planning software company agreed to be acquired by private-equity firm Thoma Bravo for $66.00 per share in an all-cash transaction valued at approximately $10.7 billion.

Insurance company Alleghany (Y) is also seeing substantial pre-market strength after agreeing to be acquired by Warren Buffett’s Berkshire Hathaway (BRK.B) for $848.02 a share in cash, or a total equity value of about $11.6 billion.

Meanwhile, shares of Nielsen Holdings (NLSN) are likely to come under pressure after the TV ratings company rejected an unsolicited acquisition proposal from a private equity consortium that valued the company at $25.40 per share.

Aerospace giant Boeing (BA) may also move to the downside after one of the company’s 737-800 planes operated by China Eastern Airlines crashed in southern China with 132 people aboard.