Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a modestly higher open on Monday, with stocks likely to move back to the upside following the notable weakness seen last week.

Stocks saw substantial volatility during trading on Friday, as traders digested the Labor Department’s closely watched monthly jobs report. The major averages spent the day showing wild swings back and forth across the unchanged line.

The major averages eventually finished the day in negative territory. The Dow fell 150.27 points or 0.4 percent to 35,065.62, the Nasdaq declined 50.48 points or 0.4 percent to 13,909.24 and the S&P 500 slid 23.86 points or 0.5 percent to 4,478.03.

For the week, the Dow slumped by 1.1 percent, the S&P 500 tumbled by 2.3 percent and the Nasdaq plunged by 2.9 percent.

The volatility on Wall Street came after the Labor Department released a report showing employment in the U.S. increased by less than expected in the month of July.

The report said non-farm payroll employment climbed by 187,000 jobs in July after rising by a downwardly revised by 185,000 jobs in June.

Economists had expected employment to jump by 200,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged down to 3.5 percent in July from 3.6 percent in June. Economists had expected the unemployment rate to remain unchanged.

The Labor Department also said average hourly employee earnings increased by $0.14 or 0.4 percent to $33.74 in July.

Annual wage growth came in at 4.4 percent in July, unchanged from June. Economists had expected the pace of growth to slow to 4.2 percent.

Following the mixed report, most economists still expect another pause in interest rate hikes by the Federal Reserve next month, although the data has led to some uncertainty about the outlook for rates beyond that.

“With the labor market very strong, wages rising solidly, and core inflation well above the Fed’s target, odds are better than 50-50 that the Fed makes another quarter percentage point rate hike in the second half of 2023, most likely at the Fed’s November 1 decision,” said Bill Adams, Chief Economist for Comerica Bank.

He added, “That would have the Fed skipping a rate hike at the next decision in September, like they did in June, in recognition that interest rates are probably near the peak for this cycle.”

Among individual stocks, shares of Amazon (AMZN) moved sharply higher after the online retail giant reported better than expected second quarter and provided upbeat revenue guidance for the current quarter.

On the other hand, shares of Apple (AAPL) saw notable weakness after the tech giant reported fiscal third quarter earnings that beat analyst estimates but a continued decrease in revenues.

Tobacco stocks showed a significant move to the downside on the day, dragging the NYSE Arca Tobacco Index down by 2.6 percent.

Considerable weakness also emerged among utilities stocks, as reflected by the 1.2 percent drop by the Dow Jones Utility Average. The average fell to its lowest closing level in over four months.

Meanwhile, telecom stocks held on to substantial gains, resulting in a 9.4 percent spike by the NYSE Arca North American Telecom Index. The index jumped to a three-month closing high.

Telephone and Data Systems (TDS) and United States Cellular (USM) both skyrocketed after each decided to initiate a process to explore strategic alternatives for UScellular.

Retail stocks also saw notable strength following Amazon’s upbeat results, moving higher along gold and housing stocks.

Commodity, Currency Markets

Crude oil futures are sliding $0.74 to $82.08 a barrel after jumping $1.27 to $82.82 a barrel last Friday. Meanwhile, after rising $7.30 to $1,976.10 an ounce in the previous session, gold futures are edging down $4.80 to $1,971.30 an ounce.

On the currency front, the U.S. dollar is trading at 142.14 yen versus the 141.76 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0981 compared to last Friday’s $1.1006.

Asia

Asian stocks ended flat to slightly lower on Monday as the dollar regained traction and Treasury yields climbed ahead of key inflation readings from China and the United States due this week.

Focus was also on earnings reports from some of the largest firms in Asia, with Chinese e-commerce giant Alibaba Group Holding, Japanese tech giants Sony Corp., SoftBank Group and Australian lender Commonwealth Bank of Australia set to unveil their financial results this week.

Meanwhile, a mixed U.S. jobs report released on Friday stoked speculation of a possible Fed pause in September.

Chinese and Hong Kong markets ended lower amid a lack of substantial stimulus details from China.

China’s Shanghai Composite Index dropped 0.6 percent to 3,268.83, while Hong Kong’s Hang Seng Index ended little changed with a negative bias at 19,537.92.

Japanese shares edged up slightly, with the Nikkei 225 Index rising 0.2 percent to 32,254.56 on optimism over earnings after automakers raising their outlook. The broader Topix settled 0.4 percent higher at 2,283.93.

Drugmaker Astellas jumped 10 percent after receiving approval from the U.S. drug regulator for the treatment of age-related macular degeneration (AMD). Peer Daiichi Sankyo rallied nearly 2 percent.

Chip-related stocks underperformed, with Advantest, Tokyo Electron and Screen Holdings falling between 1 percent and 1.6 percent.

Seoul stocks ended near a one-month low, dragged down by auto and battery makers. The Kospi fell 0.9 percent to 2,580.71, extending losses for a fourth straight session and marking the lowest closing level since July 12.

Hyundai Motor, LG Chem, Kia Corp. and POSCO Holdings lost 2-6 percent, while search engine Naver jumped 4.9 percent to a nearly 10-month high on strong second-quarter results.

Australian markets slipped as caution crept in ahead of the release of U.S. and Chinese inflation readings.

The benchmark S&P/ASX 200 Index dipped 0.2 percent to 7,309.20, while the broader All Ordinaries Index ended down 0.2 percent at 7,519.90.

Financials, miners and healthcare stocks lost ground, while firm oil prices helped lift energy stocks.

Europe

European stocks fell in cautious trade on Monday as investors exercised caution ahead of China’s trade balance figures and inflation readings from the United States and China due this week.

Meanwhile, official data showed that Germany’s industrial production declined more than expected in June on weak auto production.

Industrial production posted a monthly fall of 1.5 percent in June, following a revised 0.1 percent drop in May, Destatis reported while analysts had forecast output to decrease moderately by 0.5 percent. On a yearly basis, industrial production slid 1.7 percent in June after staying flat in May.

British house prices fell for a fourth straight month in July due to rising borrowing costs, data from mortgage lender Halifax showed earlier today.

The Eurozone Sentix Investor Confidence improved to -18.9 in August from -22.5 in July. Analysts had expected a score of -23.4.

The pan European STOXX 600 slipped 0.4 percent to 457.60 after closing 0.3 percent higher on Friday.

The German DAX and France’s CAC 40 both dropped around half a percent, while the U.K.’s FTSE 100 was down 0.7 percent.

British housebuilders Persimmon and Taylor Wimpey both fell around 1.4 percent, while Barratt Development was down 0.8 percent.

Declining copper prices weighed on miners, with Anglo American, Antofagasta and Glencore all falling around 2 percent.

Clarkson declined 1.4 percent after the shipping services provider warned it is seeing softening of rates in some sectors.

Recruitment specialist Page Group dropped about 1 percent after its total headcount shrank by 5 percent in the first half of the year.

Student accommodation specialist Unite Group fell more than 2 percent after a rating downgrade.

LSL Property Services plummeted 11 percent after the provider of mortgage and valuation services issued a profit warning on mortgage market woes.

German vehicle maker Daimler Truck Holding fell 1.5 percent. The company said that its Chief Financial Officer Jochen Goetz, 52, passed away suddenly and unexpectedly in a tragic incident on August 5th, 2023.

Aurubis AG, a supplier of non-ferrous metals, plunged 8.5 percent after revenue for the first nine months of fiscal 2023 missed expectations.

Siemens Energy tumbled nearly 3 percent after posting a wider loss for Q3 and cutting its annual outlook.

U.S. Economic Reports

The Federal Reserve is scheduled to release its report on consumer credit in the month of June at 11 am ET. Consumer credit is expected to increase by $11.0 billion in June after climbing by $7.2 billion in May.