Bargain Hunting May Contribute To Initial Rebound On Wall Street

Following the steep drop seen last week, stocks are likely to move back to the upside in early trading on Monday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.7 percent.

Bargain hunting may contribute to initial strength on Wall Street, as some traders look to pick up stocks at reduced levels following recent weakness.

The sell-off seen last Friday dragged the Dow down to a two-month closing low, while the S&P 500 tumbled to its lowest closing level in over a month.

Overall trading activity may remain somewhat subdued, however, as traders continue to express concerns about the outlook for interest rates.

Recent economic data has led to worries the Federal Reserve will raise rates more than currently anticipated and hold rates at an elevated level for an extended period.

On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in new orders for durable goods in the month of January.

The report said durable goods orders plunged by 4.5 percent in January after surging by a downwardly revised 5.1 percent in December.

Economists had expected durable goods orders to tumble by 4.0 percent compared to the 5.6 percent spike that had been reported for the previous month.

The steep drop by durable goods orders came as orders for transportation equipment plummeted by 13.3 percent in January after soaring by 15.8 percent in December.

Excluding orders for transportation equipment, durable goods orders climbed by 0.7 percent in January after falling by 0.4 percent in December. Economists had expected a 0.1 percent uptick.

Not long after the start of trading, the National Association of Realtors is scheduled to release its report on pending home sales in the month of January. Pending home sales are expected to increase by 1.0 percent in January after surging by 2.5 percent in December.

Stocks moved sharply lower in early trading on Friday and remained firmly negative throughout the session. With the steep drop on the day, the Dow fell to a two-month closing low, while the S&P 500 dropped to its lowest closing level in over a month.

The major averages all posted steep losses on the day. The Dow slumped 336.99 points or 1.0 percent to 32,816.92, the Nasdaq plunged 195.46 points or 1.7 percent to 11,394.94 and the S&P 500 tumbled 42.28 points or 1.1 percent to 3,970.04.

For the holiday-shortened week, the S&P 500 dove by 2.7 percent, while the Dow and the Nasdaq plummeted by 3.0 percent and 3.3 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index edged down by 0.1 percent, while China’s Shanghai Composite Index dipped by 0.3 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the U.K.’s FTSE 100 Index has climbed by 0.7 percent, the German DAX Index and the French CAC 40 Index are up by 1.6 percent and 17 percent, respectively.

In commodities trading, crude oil futures are edging down $0.13 to $76.19 a barrel after jumping $0.93 to $76.32 a barrel last Friday. Meanwhile, after falling $9.70 to $1,817.10 an ounce in the previous session, gold futures are inching up $2 to $1,819.10 an ounce.

On the currency front, the U.S. dollar is trading at 136.02 yen versus the 136.48 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $01.0572 compared to last Friday’s $1.0548.

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