After seeing considerable volatility last week, stocks are likely to move to the downside in early trading on Monday. The major index futures are currently pointing to a sharply lower open, with the Dow futures down by 98 points.
The downward momentum for the markets comes as traders keep a close eye on the latest developments in Europe, where Spain formally asked for a bailout from the European Union to shore up its ailing banking sector.
Europe is likely to remain in focus throughout the week, as European leaders are due to hold a summit to discuss the ongoing debt crisis on Thursday and Friday.
Peter Boockvar, managing director at Miller Tabak, said, "With Germany just not giving in to the requests for largesse that the rest of Europe wants them to disperse in the form of socializing debt obligations in the Euro region, nothing of substance will come out of the Thurs/Fri EU summit and markets today are realizing that."
"Without German allowance money, pressure will then build on the ECB to print money to the obvious dismay of the Germans," he added.
Boockvar noted traders are also likely to keep an eye on the U.S. Supreme Court, which is expected to announce its ruling on the healthcare reform law as early as today.
Not long after the open, the Commerce Department is scheduled to release its monthly report on new home sales. Economists expect new home sales to climb to an annual rate of 350,000 in May from 343,000 in April.
After moving sharply lower over the course of the trading day on Thursday, stocks showed a strong move back to the upside during trading on Friday. The markets benefited from bargain hunting but remained well off their recent highs.
The major averages pulled back off their highs for the session going into the close but still ended the day firmly in positive territory. The Dow rose 67.21 points or 0.5 percent to 12,640.78, the Nasdaq jumped 33.33 points or 1.2 percent to 2,892.42 and the S&P 500 climbed 9.51 points or 0.7 percent to 1,335.02.
In overseas trading, stocks markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index fell by 0.7 percent, while Hong Kong's Hang Seng Index ended the day down by 0.5 percent.
The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index is down by 0.7 percent, while the German DAX Index and the French CAC 40 Index have tumbled by 1.6 percent and 1.7 percent, respectively.
In commodities trading, crude oil futures are sliding $0.88 to $78.88 a barrel after tumbling $4.27 or 5.1 percent to $79.76 a barrel in the week ended June 22nd. Gold futures, which fell $61.20 or 3.8 percent to $1,566.90 last week, are climbing $4.90 to $1,571.80 an ounce.
Among currencies, the U.S. dollar moved higher last week, climbing 2.2 percent against the Japanese yen to 80.43 yen and advancing 0.5 percent against the euro to $1.257. The greenback is currently trading at 79.62 yen and is valued at $1.2494 versus the euro.
by RTT Staff Writer
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