Profit Taking May Contribute To Initial Pullback On Wall Street

After ending last Friday’s trading mostly higher, stocks may move back to the downside in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.4 percent.

Traders may look to cash in on the recent strength in the markets after the Dow and the S&P 500 ended the previous session at their best closing levels since early 2022.

Stocks have recently benefited from optimism about the outlook for interest rates, as the Federal Reserve is widely expected to leave rates unchanged until cutting rates as early as March 2024.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 180,000 jobs in November after rising by 150,000 jobs in October, while the unemployment rate is expected to hold at 3.9 percent.

“Another weaker report, especially one paired with 0.2% monthly wage growth, could further fuel the belief that not only is the tightening cycle over but rate cuts may not be far away,” said Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA.

Reports on service sector activity, private sector jobs, weekly jobless claims and consumer sentiment may also attract attention in the coming days.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on new orders for manufactured goods in the month of October. Factory orders are expected to tumble by 2.6 percent in October after surging by 2.8 percent in September.

Stocks moved mostly higher over the course of the trading session on Friday, with the major averages all climbing firmly into positive territory after showing a lack of direction early in the session.

The Dow and the S&P 500 reached their best closing levels since early 2022, while the tech-heavy Nasdaq ended the day at a four-month closing high.

While the Dow jumped 294.61 points or 0.8 percent to 36,245.50, closing high for the fourth straight session, the S&P 500 advanced 26.83 points or 0.6 percent to 4,594.63 and the Nasdaq climbed 78.81 points or 0.6 percent to 14,305.03.

For the week, the Dow surged by 2.4 percent, the S&P 500 increased by 0.8 percent and the Nasdaq rose by 0.4 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index fell by 0.6 percent, while South Korea’s Kospi climbed by 0.4 percent.

The major European markets have also turned mixed on the day. While the German DAX Index is up by 0.1 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

In commodities trading, crude oil futures are inching up $0.08 to $74.15 a barrel after plunging $1.89 to $74.07 a barrel last Friday. Meanwhile, after soaring $32.50 to $2,089.70 an ounce in the previous session, gold futures are slipping $6.90 to $2,082.80 an ounce.

On the currency front, the U.S. dollar is trading at 146.68 yen versus the 146.82 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0860 compared to last Friday’s $1.0884.

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