Following last Friday's significant gains, stocks are anticipated to face a downturn in early trading on Tuesday. Futures for major indices currently suggest a lower opening, with S&P 500 futures down by 0.5 percent.
Investors might be looking to lock in recent gains amidst ongoing uncertainty regarding the future of interest rates. Although it is almost certain that the Federal Reserve will lower rates at its upcoming meeting later this month, there is some debate about the magnitude of the cuts.
The CME Group’s FedWatch Tool indicates a 67 percent likelihood of a quarter-point rate cut later this month, and a 33 percent chance of a half-point rate cut. Jamie Cox, managing partner at Harris Financial Group, has argued against the necessity of a 50 basis point cut. Conversely, ING Chief International Economist James Knightley noted that a weaker jobs report on Friday could shift odds towards a 50 basis point reduction.
Economic focus later this week will be on the monthly jobs data. Current forecasts expect employment to increase by 165,000 jobs in August, following a rise of 114,000 jobs in July. The unemployment rate is anticipated to slightly decrease to 4.2 percent in August after climbing to 4.3 percent in July, the highest since October 2021.
Shortly after trading commences, the Institute for Supply Management (ISM) is scheduled to release its August report on manufacturing sector activity. ISM’s manufacturing index is predicted to rise to 47.5 from 46.8 in July, but any reading below 50 still indicates contraction. Additionally, the Commerce Department will release its report on construction spending for July, expected to remain unchanged after a 0.3 percent decline in June.
Stocks experienced volatility on Friday before closing sharply higher. The Dow closed higher for the fifth time in six sessions, marking a new record high. Major indices peaked at session highs towards the trading close. The Nasdaq surged by 197.19 points or 1.1 percent to 17,713.62, the S&P 500 rose by 56.44 points or 1.0 percent to 5,648.40, and the Dow climbed 228.03 points or 0.6 percent to 41,563.08.
For the week, the indices had mixed performances; the Nasdaq fell by 0.9 percent, while the S&P 500 edged up by 0.2 percent and the Dow advanced by 0.9 percent.
Internationally, most Asia-Pacific stock markets displayed slight weakness on Monday. Japan’s Nikkei 224 Index closed marginally below the unchanged line, and China’s Shanghai Composite Index dipped by 0.3 percent. European markets have also moved downwards, with the U.K.’s FTSE 100 Index down by 0.5 percent, Germany’s DAX Index by 0.3 percent, and France’s CAC 40 Index by 0.2 percent.
In commodities trading, crude oil futures are down $0.62 to $72.93 a barrel, after plummeting $2.36 to $73.55 a barrel on Friday. Gold futures, following a $32.70 fall to $2,527.60 an ounce in the previous session, are edging down $2 to $2,525.60 an ounce.
On the currency front, the U.S. dollar is trading at 145.99 yen compared to 146.90 yen on Monday. Against the euro, the dollar is valued at $1.1048, down from $1.1072 the previous day.
