U.S. Stocks May See Further Downside In Early Trading

Following the sharp decline seen last week, stocks may see further downside in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.4 percent.

Concerns about the outlook for interest rates may continue to weigh on Wall Street following last week’s Federal Reserve meeting.

The Fed left interest rates unchanged as widely expected but forecast another rate hike before the end of the year as well as keeping rates at elevated levels for longer than previously anticipated.

CME Group’s Fed Watch Tool is currently indicating a 79.7 percent chance the Fed will leave interest rates unchanged at its next meeting in late October/early November and just a 20.3 percent chance of a quarter point rate hike.

Meanwhile, the Fed Watch Tool is indicating a 59.3 percent chance the Fed will leave rates unchanged at its December meeting and a 35.5 percent chance the central bank will raise rates by a quarter point.

Overall trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

Later in the week, the Commerce Department is due to release its report on personal income and spending in the month of August, which includes readings on inflation said to be preferred by the Fed.

Reports on consumer confidence, new home sales and durable goods orders may also attract attention in the coming days.

After an early move to the upside, stocks saw substantial volatility in the latter part of the trading session on Friday. The major averages showed wild swings back and forth across the unchanged line before eventually ending the day modestly lower.

The tech-heavy Nasdaq edged down 12.18 points or 0.1 percent 13,211.81, its lowest closing level in over three months. The S&P 500 also dipped 9.94 points or 0.2 percent to a three-month closing low of 4,320.06, while the Dow fell 106.58 points or 0.3 percent to a two-month closing low of 33,963.84.

Largely reflecting the sell-off seen on Wednesday and Thursday, the Nasdaq showed a 3.6 percent nosedive for the week. The S&P 500 also plunged by 2.9 percent, while the Dow tumbled by 1.9 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while Hong Kong’s Hang Seng Index dove by 1.8 percent.

Meanwhile, the major European markets have all shown significant moves to the downside on the day. While the German DAX Index has slumped by 1.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 1.0 percent.

In commodities trading, crude oil futures are inching up $0.07 to $90.10 a barrel after rising $0.40 to $90.03 a barrel last Friday. Meanwhile, after edging up $6 to $1,945.60 an ounce in the previous session, gold futures are slipping $2.30 to $1,943.30 an ounce.

On the currency front, the U.S. dollar is trading at 148.69 yen versus the 148.37 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0625 compared to last Friday’s $1.0653.

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