U.S. Stocks May Add To Last Week’s Strong Gains In Early Trading

The major U.S. index futures are currently pointing to a modestly higher open on Monday, with stocks poised to add to the strong gains posted last week.

The markets may continue to benefit from recent upward momentum, which lifted the major averages to new record highs last week.

The Dow closed above 40,000 for the first time last Friday amid renewed optimism about the outlook for interest rates.

While the Federal Reserve is widely expected to leave interest rates unchanged next, CME Group’s FedWatch Tool is currently indicating a 74.3 percent chance rates will be a quarter point lower by September.

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

The economic calendar remains relatively quiet throughout the week, although reports on durable goods orders and new and existing home sales may attract some attention along with the minutes of the latest Fed meeting.

Traders may also be reluctant to make significant moves ahead of the release of quarterly results from AI darling Nvidia (NVDA) after the close of trading on Wednesday.

Following the modest pullback seen over the course of Thursday’s session, stocks showed a lack of direction during trading on Friday. The major average spent the day bouncing back and forth across the unchanged line before eventually closing narrowly mixed.

Despite the choppy trading, the Dow closed above 40,000 for the first time, rising 134.21 points or 0.3 percent to 40,003.59.

The S&P 500 also crept up 6.17 points or 0.1 percent to 5,303.27, while the tech-heavy Nasdaq edged down 12.35 points or 0.1 percent at 16,685.97.

For the week, the Nasdaq surged by 2.1 percent, while the S&P 500 jumped by 1.5 percent and the Dow shot up by 1.2 percent.

The choppy trading on Wall Street came as traders seemed reluctant to make significant moves as they digest recent strength in the markets, which saw the major averages reach new record highs.

While recent economic data has generated optimism about an interest rate cut in the coming months, comments from Federal Reserve officials have put a damper on some of the cheer.

Following the slew of U.S. data released over the past two days, the economic calendar was relatively quiet today, although the Conference Board released a report showing a continued decrease by its reading on leading U.S. economic indicators in the month of April.

The Conference Board said its leading economic index fell by 0.6 percent in April after dipping by 0.3 percent in March. Economists had expected the index to decrease by another 0.3 percent.

Among individual stocks, shares of Reddit (RDDT) moved sharply higher after the social media company announced a partnership with OpenAI.

Online networking company Doximity (DOCS) also surged after reporting better than expected fiscal fourth quarter results.

On the other hand, shares of GameStop (GME) plunged after the video game retailer forecast a decrease in first quarter sales and revealed plans to sell up to 45 million class A common shares

Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance by the broader markets.

Gold stocks showed a substantial move to the upside, however, with the NYSE Arca Gold Bugs Index surging by 3.7 percent to a two-year closing high. The rally by gold stocks came amid a sharp increase by the price of the precious metal.

Oil producer, brokerage and networking stocks also turned in strong performances, while modest weakness emerged among semiconductor stocks.

Commodity, Currency Markets

Crude oil futures are falling $0.60 to $79.46 a barrel after climbing $0.83 to $80.06 a barrel last Friday. Meanwhile, after surging $31.90 to $2,417.40 an ounce in the previous session, gold futures are inching up $6.60 to $2,424 an ounce.

On the currency front, the U.S. dollar is trading at 156.18 yen versus the 155.65 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0857 compared to last Friday’s $1.0869.

Asia

Asian stocks advanced on Monday due to rising expectations for Fed rate cuts in 2024 and China’s stimulus measures announced last week to support the country’s struggling property market.

The dollar held steady in Asian trading, while gold prices jumped more than 1 percent to reach a record high due to adjustment in interest rate expectations. Oil prices saw modest gains due to political uncertainty in two of the world’s major crude producers.

Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amir-Abdollahian have been declared dead following a helicopter crash due to heavy fog near Jolfa, a city bordering Azerbaijan.

Separately, Saudi Arabia’s state news agency reported that 88-year-old King Salman would undergo treatment for lung inflammation.

China’s Shanghai Composite Index climbed 0.5 percent to 3,171.14 as the People’s Bank of China kept its benchmark loan prime rate unchanged, as widely expected. Hong Kong’s Hang Seng Index rose 0.4 percent to 19,636.22.

There was optimism around the Chinese economic recovery after China announced new measures last week to stabilize the property sector and boost home sales in the coming weeks.

The measures included a reduction of the down payment for housing loans, cutting mortgage interest rates for first and second home purchases, and removing the floor on mortgage rates.

In addition, China’s finance ministry auctioned 30-year bonds at a yield of 2.57 percent on Friday, largely in line with expectations.

Japanese markets rose notably as investors priced in a Fed rate cut as early as September. The Nikkei 225 Index advanced 0.7 percent to 39,069.68, hitting the 39,000 mark for the first time in a month. The broader Topix Index settled 0.8 percent higher at 2,768.04.

Chip material maker Shin-Etsu Chemical surged 4.3 percent, while tech investor SoftBank Group gave up 2.8 percent.

Seoul stocks closed higher, with the Kospi rising 0.6 percent to 2,742.14. Tech heavyweight Samsung Electronics jumped 1.9 percent and automaker Hyundai Motor surged 2.7 percent.

Australian markets closed higher, led by commodity-related stocks. The benchmark S&P ASX 200 Index rose 0.6 percent to 7,863.70 ahead of the release of the minutes of the RBA’s May meeting on Tuesday. The broader All Ordinaries Index gained 0.6 percent to end at 8,132.10.

Star Entertainment shares soared 20 percent after the casino operator said it had received unsolicited and non-binding interest from several external parties regarding potential takeover transactions.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index inched up 0.3 percent to 11,735.71.

Europe

European stocks have moved higher on Friday as investors welcome stimulus measures in China to support the country’s property sector and pondered the outlook for rates.

European sovereign bond yields crept up after ECB Governing Council member Martins Kazaks indicated in a Bloomberg Adria interview that June seems the right moment to start lowering borrowing costs, but future moves will be largely determined by incoming data.

He emphasized that any reduction in rates should be “cautious” and “gradual” and that the process should not be rushed.

Separately, ECB executive board member Isabel Schnabel also warned against back-to-back interest-rate cuts in June and July.

“Based on current data, a rate cut in July does not seem warranted as there is a risk of easing prematurely,” she told the Nikkei newspaper.

Elsewhere, U.S. Fed Governor Michelle Bowman said on Friday that she has seen no on in inflation this year and remains willing to hike rates should progress stall or reverse.

While the French CAC 40 Index is up by 0.6 percent, the German DAX Index is up by 0.5 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

Miners Antofagasta and Glencore have moved to the upside as copper prices surge to record highs in the wake of fresh Chinese stimulus measures to help boost the country’s property market.

Shares of Keywords Studios have moved sharply higher after the company said that it is in talks with European private equity company EQT Group over a possible cash offer worth 2,550 pence a share.

Meanwhile, British Land has fallen after selling its stake in the Meadowhall Shopping Centre in Sheffield, U.K. for 360 million pounds to Norges Bank Investment Management.

No-frills airline Ryanair Holdings has also moved to the downside despite posting a 34 percent year-on-year increase in annual profit.

U.S. Economic Reports

Federal Reserve Vice Chair for Supervision Michael Barr is scheduled to speak on “Bank Supervision and Regulation” before the 2024 Financial Markets Conference hosted by the Federal Reserve Bank of Atlanta at 9 am ET.

Also at 9 am ET, Federal Reserve Board Governor Christopher Waller is due to give welcome remarks before the Third Conference on the International Roles of the U.S. Dollar hosted by the Federal Reserve.

Federal Reserve Vice Chair Philip Jefferson is scheduled to speak on “The U.S. Economy and Housing Price Dynamics” before the Mortgage Bankers Association’s Secondary and Capital Markets Conference at 10:30 am ET.

At 7 pm ET, Atlanta Federal Reserve President Raphael Bostic is due to moderate a dinner session before the 2024 Financial Markets Conference hosted by the Federal Reserve Bank of Atlanta.

Stocks In Focus

Shares of Johnson Controls (JCI) are moving sharply higher in pre-market trading after a report from Bloomberg News said activist investor Elliott Investment Management has built a $1 billion-plus stake in the security and safety company.

Chipmaker Micron Technology (MU) may also move to the upside after Morgan Stanley upgraded its rating on the company’s stock to Equal Weight from Underweight.

On the other hand, U.S.-listed shares of Li Auto (LI) may come under pressure after the Chinese electric vehicle maker reported weaker than expected first quarter earnings and provided disappointing revenue guidance for the current quarter.