Looming Fed Meeting May Lead To Light Trading On Wall Street

Stocks may move to the upside in early trading on Monday, although trading activity is likely to be somewhat subdued ahead of this week’s Federal Reserve meeting. The major index futures are currently pointing to a modestly higher open for the markets, with the Dow futures up by 16 points.

Traders may be reluctant to make more significant moves ahead of the Fed’s announcement of its monetary policy decision on Wednesday.

While a majority of economists expect the Fed to leave interest rates unchanged, the central bank is widely expected to signal an openness to cutting rates in the near future.

CME Group’s FedWatch tool currently indicates just a 22.5 percent chance the Fed will cut rates this week but a 65.7 percent chance for a rate cut next month.

Recent indications the U.S.-China trade dispute is contributing to a slowdown in U.S. economic growth has led to speculation the Fed may cut rates, with Fed Chairman Jerome Powell pledging to act “as appropriate” to sustain the expansion.

On the U.S. economic front, the New York Fed released a report showing a sharp downward turn in regional manufacturing activity in June, with the index of activity in the sector showing a record monthly decline.

The New York Fed said its general business conditions index plunged to a negative 8.6 in June from a positive 17.8 in May, with a negative reading indicating a contraction in manufacturing activity. Economists had expected the index to drop to a positive 10.0.

With the much bigger than expected decrease, the general business conditions index recorded its first negative reading in over two years.

Shortly after the start of trading, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of June. The housing market index is expected to come inch up to 67 in June after climbing to 66 in May.

Stocks staged a late-day recovery attempt but still ended Friday’s trading mostly lower following an early move to the downside. The major averages gave back some ground after ending Thursday’s trading in positive territory.

The tech-heavy Nasdaq underperformed its counterparts, ending the session down 40.47 points or 0.5 percent at 7,796.66. The Dow edged down 17.16 points or 0.1 percent to 26,089.61 and the S&P 500 dipped 4.66 points or 0.2 percent to 2,886.98.

Despite the pullback on the day, the major averages all moved higher for the week. The Nasdaq advanced by 0.7 percent, while the Dow and the S&P 500 rose by 0.4 percent and 0.5 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index closed just above the unchanged line, while Australia’s S&P/ASX 200 Index fell by 0.4 percent.

The major European markets have also turned mixed on the day. While the French CAC 40 Index is up by 0.2 percent, the German DAX Index is just below the unchanged line and the U.K.’s FTSE 100 Index is down by 0.1 percent.

In commodities trading, crude oil futures are falling $0.39 to $52.12 a barrel after rising $0.23 to $52.51 a barrel last Friday. Meanwhile, after inching up $0.80 to $1,344.50 an ounce in the previous session, gold futures are slipping $1.40 to $1,343.10 an ounce.

On the currency front, the U.S. dollar is trading at 108.60 yen compared to the 108.56 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1238 compared to last Friday’s $1.208.

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