After ending the previous session nearly unchanged, stocks are likely to move to the downside in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 195 points.
The downward momentum on Wall Street comes amid concerns about the outlook inflation following the recent advance by bond yields.
The yield on the benchmark ten-year note ended last Friday’s trading at its highest closing level in almost a year and is seeing further upside in early trading.
Bond yields remain at historically low levels, but the recent increase may still spook investors already concerned that stocks are overbought.
A notable drop by shares of Boeing (BA) may weigh on the Dow after dozens of the aerospace giant’s 777 jets were grounded.
The move came after an engine failed on a United Airlines (UAL) flight on Saturday, forcing the 777 to make an emergency landing at Denver International Airport shortly after takeoff.
Overall trading activity may be somewhat subdued, however, as traders may be reluctant to make any significant moves ahead of two days of Congressional testimony by Federal Reserve Chair Jerome Powell.
Powell is likely to reiterate that the Fed plans to maintain easy monetary policy for the foreseeable future as the economy continues to recover from the coronavirus pandemic.
The Fed has recently signaled that it is not concerned about inflation, suggesting that inflation should exceed its 2 percent target for some time before the central bank considers raising interest rates.
Not long after the start of trading, the Conference Board is scheduled to release its report on leading economic indicators in the month of January. Economists expect the leading economic index to rise by 0.3 percent.
After moving mostly higher early in the session, stocks gave back ground over the course of the trading session on Friday. The major averages pulled back off their best levels of the day before closing near the unchanged line.
The major averages finished the day with a mixed performance. While the S&P 500 dipped 7.26 points or 0.2 percent to 3,906.71, the Dow crept up 0.98 points or less than a tenth of a percent to 31,494.32 and the Nasdaq inched up 9.10 points or 0.1 percent to 13,874.46.
For the holiday-shortened week, the Dow crept up by 0.1 percent, while the S&P 500 slid by 0.7 percent and the Nasdaq slumped by 1.6 percent.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.5 percent. China’s Shanghai Composite Index tumbled by 1.5 percent, while South Korea’s Kospi fell by 0.9 percent.
The major European markets have also moved to the downside on the day. While the French CAC 40 Index has fallen by 0.5 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both down by 0.6 percent.
In commodities trading, crude oil futures are climbing $0.60 to $59.84 a barrel after plunging $1.28 to $59.24 a barrel last Friday. Meanwhile, after rising $2.40 to $1,777.40 an ounce in the previous session, gold futures are jumping $17.20 to $1,794.60 an ounce.
On the currency front, the U.S. dollar is trading at 105.47 yen versus the 105.45 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.2144 compared to last Friday’s $1.2119.
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