U.S. Stocks May Lack Direction Following Last Week’s Rally

Following the rally seen last week, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures down by just 0.1 percent.

Traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets after last week’s strong gains lifted the S&P 500 and the Nasdaq to their best closing levels in over a year.

A number of traders are also likely to remain away from their desks amid an abbreviated trading session and the 4th of July holiday on Tuesday.

When trading resumes, the focus will shift to the minutes of the latest Federal Reserve meeting along with the Labor Department’s closely watched monthly jobs report.

Recent data has pointed to a resilient U.S. economy, while slowing inflation has added to optimism about the outlook for interest rates.

While the Fed is still widely expected to raise interest rates by a quarter point next month, traders are hopeful that will be end of the rate-hiking cycle.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of June.

The ISM’s manufacturing PMI is expected to inch up to 47.2 in June from 46.9 in May, although a reading below 50 would still indicate contraction.

The Commerce Department is also due to release its report on construction spending in the month of May. Construction spending is expected to climb by 0.5 percent in May after jumping by 1.2 percent in April.

Stocks moved sharply higher during trading on Friday, adding to the gains posted in Thursday’s session. The major averages all moved to the upside on the day, with the tech-heavy Nasdaq leading the advance.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Nasdaq surged 196.59 points or 1.5 percent to 13,787.92, the S&P 500 jumped 53.94 points or 1.2 percent to 4,450.38 and the Dow climbed 285.18 points or 0.8 percent to 34,407.60.

For the week, the S&P 500 spiked by 2.4 percent, while the Nasdaq shot up by 2.2 percent and the Dow leapt by 2.0 percent. The Nasdaq and the S&P 500 also posted substantial gains for the first half of 2023.

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Monday. Japan’s Nikkei 225 Index surged by 1.7 percent, while China’s Shanghai Composite Index jumped by 1.3 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index is down by 0.1 percent, the French CAC 40 Index is up by 0.1 percent and the U.K.’s FTSE 100 Index is up by 0.3 percent.

In commodities trading, crude oil futures are advancing $0.75 to $71.39 a barrel after climbing $0.78 to $70.64 a barrel last Friday. Meanwhile, after rising $11.50 to $1,929.40 an ounce in the previous session, gold futures are slipping $7.60 to $1,921.80 an ounce.

On the currency front, the U.S. dollar is trading at 144.73 yen versus the 144.31 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0901 compared to last Friday’s $1.0909.

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