Futures Pointing To Initial Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to regain ground following the significant weakness seen last Friday.

Traders may look to pick up stocks at somewhat reduced levels after last Friday’s pullback, which was led by a sell-off among tech stocks.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of some key U.S. economic data in the coming days.

The monthly jobs report for November along with a report on retail sales in October are due to be released on Tuesday, while a report on consumer price inflation in November is scheduled to be released on Thursday.

The data could impact the outlook for interest rates following the Federal Reserve’s monetary policy announcement last Wednesday.

While the Fed cut rates by another quarter point, as widely expected, officials’ projections showed significant differences of opinion about further rate cuts.

Following the mixed performance seen during Thursday’s session, stocks showed a significant move to the downside during trading on Friday. The major averages all moved lower, with the tech-heavy Nasdaq showing a particularly steep drop.

The major averages ended the day off their worst levels of the session but still in negative territory. The Nasdaq plunged 398.69 points or 1.7 percent to 23,195.17 and the S&P 500 tumbled 73.59 points or 1.1 percent to 6,827.41.

The narrower Dow posted a more modest loss, falling 245.96 points or 0.5 percent to 48,458.05 after hitting a new record intraday high in early trading.

For the week, the major averages turned in a mixed performance. While the Dow jumped by 1.1 percent, the S&P 500 slid by 0.6 percent and the Nasdaq dove by 1.6 percent.

The weakness that emerged on Wall Street came amid a sell-off by tech stocks, as reflected by the slump by the Nasdaq.

Broadcom (AVGO) helped lead the tech sector lower, with the chipmaker plunging by more than 11 percent on the day.

The steep drop by Broadcom came even though the company reported better than expected fiscal fourth quarter results and providing upbeat guidance for the current quarter.

Tech stocks like Micron Technology (MU), Oracle (ORCL), Advance Micro Devices (AMD) and Nvidia (NVDA) also moved sharply lower, reflecting a continued rotation out of tech stocks.

Negative sentiment may also have been generated in reaction to comments by Chicago Federal Reserve President Austan Goolsbee explaining his decision to vote against cutting interest rates at last week’s Fed meeting.

In a post on the Chicago Fed website, Goolsbee said he is uneasy about “too heavily front-loading rate cuts and just assuming that inflation will be transitory.”

“While I voted to lower rates at the September and October meetings, I believe we should have waited to get more data, especially about inflation, before lowering rates further,” Goolsbee said.

Computer hardware stocks turned in some of the market’s worst performances on the day, resulting in a 5.2percent nosedive by the NYSE Arca Computer Hardware Index.

Semiconductor and networking stocks also saw substantial weakness, contributing to the steep drop by the Nasdaq.

Outside the tech sector, oil service, brokerage and steel stocks also saw notable weakness, while some strength was visible among pharmaceutical stocks.

Commodity, Currency Markets

Crude oil futures are edging down $0.16 to $57.28 a barrel after slipping $0.16 to $57.44 barrel last Friday. Meanwhile, after climbing $15.30 to $4,328.30 an ounce in the previous session, gold futures are surging $45.70 to $4,374 an ounce.

On the currency front, the U.S. dollar is trading at 155.05 yen versus the 155.81 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1756 compared to last Friday’s $1.1740.

Asia

Asian stocks fell on Monday as investors fretted over tech valuations and digested disappointing economic data from China.

Gold soared nearly 1 percent to a seven-week high in Asian trading as the U.S. dollar struggled to regain traction ahead of the release of delayed U.S. jobs and inflation data as well as a slew of central bank decisions due this week.

Oil ticked higher as Venezuelan supply disruptions outweighed concerns over a massive oversupply in the new year.

Chinese shares ended lower as bondholders of distressed developer China Vanke rejected a proposal to extend a bond payment and a slew of Chinese economic data underscored structural weaknesses.

The benchmark Shanghai Composite Index slid 0.6 percent to 3,867.92, while Hong Kong’s Hang Seng Index slumped 1.3 percent to 25,628.88.

Official data showed Chinese industrial production grew 4.8 percent year-on-year in November, missing forecasts for an increase of 5.0 percent and down from 4.9 percent in October.

Retail sales rose an annual 1.3 percent, well shy of forecasts for a gain of 3.0 percent and down from 2.9 percent in the previous month.

Fixed asset investment slumped 2.6 percent year-on-year, missing forecasts for a loss of 2.4 percent after slumping 1.7 percent a month earlier. The jobless rate came in at 5.1 percent, unchanged and as expected.

Japanese market tumbled as tech shares tracked their U.S. peers lower on concerns over stretched valuations. The Nikkei 225 Index dove 1.3 percent to 50,168.11, while the broader Topix Index settled 0.2 percent higher at 3,431.47.

Among the prominent decliners, Advantest plunged 6.4 percent, SoftBank Group lost 6 percent and Tokyo Electron declined 1.1 percent.

Banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial both rose over 2 percent as an upbeat Tankan survey reinforced view that the Bank of Japan will raise interest rates on Friday.

Seoul stocks slumped as AI bubble woes resurfaced. The Kospi tumbled 1.8 percent to 4,090.59. Samsung Electronics lost 3.8 percent and SK Hynix gave up 3 percent following disappointing AI margins guidance from Broadcom and Oracle.

Korea Zinc shares surged 4.9 percent ahead of a board meeting to discuss plans for a major new smelter project in the United States.

Australian markets ended notably lower as miners pulled back from record highs reached in the previous session. The benchmark S&P/ASX 200 Index dropped 0.7 percent to 8,635, while the broader All Ordinaries Index closed 0.7 percent lower at 8,923.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished marginally higher at 13,408.14 despite a measure of the country’s services sector sinking deeper into contraction in November.

Europe

European stocks have moved mostly higher on Monday ahead of a busy week for U.S. economic data and a slew of central bank decisions.

Investors shrugged off data that showed German wholesale price inflation accelerated in November to the highest level in nine months.

Wholesale prices rose 1.5 percent year-over-year in November, faster than the 1.1 percent rise in October. Moreover, this was the highest rate since February, when prices rose 1.6 percent.

While the German DAX Index is up by 0.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 1.0 percent.

In corporate news, health technology company Royal Philips has moved to the downside after it has entered into an agreement to acquire SpectraWAVE.

Sanofi shares have also slumped. The French pharmaceutical firm said its experimental drug tolebrutinib failed to meet its primary endpoint in a Phase 3 clinical trial.

In adition, the company said a U.S. regulatory decision on its tolebrutinib experimental treatment for a type of multiple sclerosis would likely be delayed again.

Hikma Pharma has also fallen after its Chief Executive Officer Riad Mishlawi stepped down by mutual agreement.

Defense stocks are also under pressure after Volodymyr Zelenskyy offered to drop Ukraine’s aspirations to join the NATO military alliance following talks with the United States.

Meanwhile, Sika has moved to the upside. The specialty chemicals company said it would acquire Finja for an undisclosed amount.

U.S. Economic News

A report released by the Federal Reserve Bank of New York on Monday showed an unexpected downturn by regional manufacturing activity in the month of December.

The New York Fed said its general business conditions index plunged to a negative 3.9 in December from a positive 18.7 in November, with a negative reading indicating contraction. Economists had expected the index to fall to a positive 10.6.

The steep drop by general business conditions index came a month after it surged to its highest level in a year.

Meanwhile, the New York Fed said firms have become more optimistic conditions will improve over the next six months, with the future general business conditions index jumping to 35.7 in December from 19.1 in November.

At 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of December. The housing market index is expected to inch up to 39 in December after ticking up to 38 in November.

New York Federal Reserve President John Williams is due to participate in an economic growth discussion before an event organized by the New Jersey Bankers Association at 10:30 am ET.