Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to continue to show a lack of direction after ending last Friday’s trading little changed.

Traders may stick to the sidelines as they take a moment to assess the recent activity in the markets and the near-term outlook.

The Nasdaq and the S&P 500 set new record highs last week and posted strong weekly gains, while the narrower Dow moved lower for the third time in the last four weeks.

Investors may also be reluctant to make significant moves ahead of the release of some key economic data in the coming days.

Reports on retail sales and industrial production are likely to be in the spotlight, while reports on homebuilder confidence, housing starts and existing home sales may also attract attention.

The upcoming Juneteenth holiday may also lead to lighter than usual trading activity, as the markets will be closed on Wednesday.

Stocks saw modest weakness throughout much of the trading session on Friday but recovered to end the day roughly flat. The tech-heavy Nasdaq bounced back and forth across the unchanged line before eventually ending the session at a record closing high.

While the Nasdaq crept up 21.32 points or 0.1 percent to 17,688.88, the S&P 500 edged down 2.14 points or less than a tenth of a percent to 5,431.60 and the Dow dipped 57.94 points or 0.2 percent to 38,589.16.

For the week, the Nasdaq surged by 3.2 percent and the S&P 500 jumped by 1.6 percent, but the Dow bucked the uptrend and fell by 0.5 percent.

Traders looked to cash in on recent strength in the markets early in the session, but selling pressure remained subdued amid the release of tamer than expected inflation data.

While Federal Reserve officials forecast just one rate cut this year following this week’s monetary policy meeting, traders are hopeful the predictions will turn out to be overly conservative if inflation continues to slow in the coming months.

“A lot can happen in a week. Markets became nervous after last Friday’s strong payroll report but after several good inflation releases this week, yields fell and equities rose,” said Jeffrey Roach, Chief Economist for LPL Financial.

“As we learned from the press conference, Chairman Powell is ready to respond as the data allow,” he added. “At this point, inflation pressures are stuck with some sticky components, but other indicators suggest that inflation is easing and investors should expect the Fed to begin cutting rates later this year.”

The Labor Department released a report showing unexpected decreases by U.S. import and export prices in the month of May.

The Labor Department said import prices fell by 0.4 percent in May following a 0.9 percent advance in April. Economists had expected import prices to inch up by 0.1 percent.

Prices for fuel imports led the way lower, tumbling by 2.0 percent, although prices for non-fuel imports also dipped by 0.3 percent.

Meanwhile, the report said export prices slid by 0.6 percent in May after climbing by an upwardly revised 0.6 percent in April.

Economists had expected export prices to come in unchanged compared to the 0.5 percent increase originally reported for the previous month.

Meanwhile, a separate report from the University of Michigan showed a continued deterioration in U.S. consumer sentiment in the month of June.

The report said the consumer sentiment index fell to 65.6 in June after tumbling to 69.1 in May. Economists had expected the index to rebound to 72.0.

With the unexpected decrease, the consumer sentiment index dropped to its lowest level since hitting 61.3 in November 2023.

On the inflation front, the report said year-ahead inflation expectations were unchanged at 3.3 percent in June, above the 2.3-3.0 percent range seen in the two years prior to the pandemic.

Long-run inflation expectations, on the other hand, inched up to 3.1 percent in June from 3.0 percent in May, reaching the highest level since hitting 3.2 percent in November 2023.

Oil service stocks saw substantial weakness amid a modest decrease by the price of crude oil, with the Philadelphia Oil Service Index plunging by 2.0 percent to its lowest closing level in four months.

Considerable weakness was also visible among airline stocks, as reflected by the 2.0 percent slump by the NYSE Arca Airline Index. With the decrease, the index fell to a six-month closing low.

Steel, computer hardware and networking stocks also saw notable weakness, while software and gold stocks moved to the upside on the day.

Commodity, Currency Markets

Crude oil futures are climbing $0.50 to $78.95 a barrel after slipping $0.17 to $78.45 a barrel last Friday. Meanwhile, after surging $31.10 to $2,349.10 an ounce in the previous session, gold futures are sliding $16.50 to $2,332.60 an ounce.

On the currency front, the U.S. dollar is trading at 157.87 yen versus the 157.40 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0708 compared to last Friday’s $1.0703.

Asia

Asian stocks ended mostly lower on Monday as worries grew over Europe’s political stability and China reported mixed economic data.

The dollar held firm, keeping oil and gold prices under pressure in Asian trading.

Central banks in Australia, Norway and the U.K. are all expected to hold rates steady at this week’s meetings, while another 25 basis point rate cut is expected from the Swiss National Bank (SNB).

Chinese stocks fell as a slew of economic data underlined the country’s bumpy recovery and the People’s Bank of China (PBOC) left a key policy rate unchanged, disappointing some who had expected a rate cut following surprisingly soft bank lending data.

The benchmark Shanghai Composite Index dropped 0.6 percent to 3,015.89, while Hong Kong’s Hang Seng Index finished marginally lower at 17,936.12 after a choppy session.

China’s May retail sales topped forecasts, but industrial output, home sales and fixed-asset investment all underwhelmed, suggesting Beijing would need to do more to prop up feeble domestic demand.

China’s state media reported that the country is facing internal and external constraints to lower rates.

Japanese markets led regional losses as the Bank of Japan’s delay in normalization of policy raised concerns about the economic outlook.

There was also some disappointment on the data front after core machinery orders fell in April for the first time in three months.

The Nikkei 225 Index slumped 1.8 percent to 38,102.44, while the broader Topix Index settled 1.7 percent lower at 2,700.01.

Toyota Motor shed 2.7 percent amid continued fallout from a testing scandal, while Honda Motor, Nissan, Suzuki and Mazda lost 3-4 percent. Chip-related shares also underperformed, with Tokyo Electron and Advantest falling 3-4 percent.

Seoul stocks ended lower on concerns over a possible delay in long-awaited interest rate cuts by the U.S. Federal Reserve. The Kospi slid 0.5 percent to 2,744.10. Hyundai Motor surged 3.9 percent after its India unit filed for an initial public offering.

Australian stocks ended modestly lower, dragged down by mining and energy stocks. The benchmark S&P/ASX 200 Index slipped 0.3 percent to 7,700.30, while the broader All Ordinaries Index closed 0.4 percent lower at 7,943.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index tumbled 1.4 percent to 11,698.51 after data revealed New Zealand’s services sector recorded its weakest level of activity in almost three years in May.

Europe

European stocks are flat to slightly higher on Monday after falling sharply last week on concerns that a new government in France may worsen the country’s fiscal situation and threaten the stability of the euro zone.

French government bonds won some respite after Marine Le Pen, the leader of the French far right, said she would co-operate with President Emmanuel Macron if she wins the snap parliamentary election that begins later this month.

In addition, European Central Bank policymakers reportedly said they had no plans to launch emergency purchases of French bonds to stabilize the market.

While the U.K.’s FTSE 100 Index is nearly unchanged, the German DAX Index is up by 0.2 percent and the French CAC 40 Index is up by 0.4 percent.

In corporate news, Dutch insurer ING has moved notably higher after it forecast total income growth of between 4 percent and 5 percent per year during 2024-2027.

Denmark’s Topdanmark has soared as Finnish insurer Sampo agreed to buy its rival for 33 billion Danish crowns ($4.73 billion) in an all-share deal.

Ascential shares have also jumped in London. The company focused on exhibitions, festivals, and information services, confirmed that full-year trading is in line with its expectations.

Meanwhile, Carl Zeiss Meditec AG has plunged. The German firm announced a reduction in its revenues forecast for the fiscal 2023-24 and a 3 percent decline in adjusted revenue for the first eight months of the fiscal 2023-2024 compared to the prior year.

China-linked Hermes, LVMH and Kering are also moving lower in Paris after a slew of Chinese economic data underlined the country’s bumpy recovery and the People’s Bank of China left a key policy rate unchanged, disappointing some who had expected a rate cut following surprisingly soft bank lending data.

In economic news, survey data from property market website Rightmove showed asking prices for British homes coming to the market were flat this month.

Separately, the Make UK Q2 Manufacturing Outlook Survey revealed that output and orders at U.K. manufacturers have picked up in the second quarter ahead of the forthcoming election.

U.S. Economic Reports

New York manufacturing activity contracted at a notably slower rate in the month of June, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index climbed to a negative 6.0 in June from a negative 15.6 in May, although a negative reading still indicates contraction. Economists had expected the index to rise to a negative 9.0.

Despite the continued contraction in current activity, the New York Fed said optimism about the six-month outlook picked up to its highest level in more than two years.

At 1 pm ET, Philadelphia Federal Reserve President Patrick Harker is scheduled to speak on the economic outlook before the Global Interdependence Center 42nd Annual Monetary and Trade Conference.

Stocks In Focus

Shares of Autodesk (ADSK) are moving sharply higher in pre-market trading after a report from the Wall Street Journal said activist investor Starboard Value has taken a roughly $500 million stake in the software company.

Consumer electronics retailer Best Buy (BBY) is also likely to see initial strength after UBS upgraded its rating on the company’s stock to Buy from Neutral.

On the other hand, shares of Louisiana-Pacific (LPX) may move to the downside after Goldman Sachs downgraded its rating on the building materials company’s stock to Sell from Neutral.