After moving sharply higher over the course of the previous session, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures down by just 5 points.
While some traders may look to cash in on last Friday's standout gains, trading activity is likely to be somewhat subdued ahead of the Independence Day holiday on Wednesday. Traders are also likely to be looking ahead to key employment data later in the week.
Nonetheless, disappointing economic data from overseas may generate some selling pressure, with a report from HSBC and Markit Economics showing that Chinese manufacturing activity contracted for the eighth consecutive month in June.
A separate report from Markit Economics showed that the euro area's manufacturing sector also contracted for the eleventh straight month in June.
Not long after the open, the Institute for Supply Management is scheduled to release its report on U.S. manufacturing activity in the month of June. Economists expect the index of activity in the sector to edge down to 52.0 in June from 53.5 in May, with a reading above 50 indicating growth.
The Commerce Department is also scheduled to release its monthly report on construction spending, with spending expected to increase by 0.2 percent in May following a 0.3 percent increase in April.
Among individual stocks, shares of Amylin Pharmaceuticals (AMLN) are likely to see early strength after the biopharmaceutical company agreed to be acquired by Bristol-Myers Squibb (BMY) for $31 per share in cash. The offer price represents a 10 percent premium to Amylin's closing price on Friday.
The transaction has a total value of approximately $7 billion, including Amylin's net debt and a contractual payment obligation to Eli Lilly (LLY).
Computer giant Dell (DELL) also recently announced an agreement to acquire Quest Software (QSFT) for $28 per share in cash. The agreement values Quest at $2.4 billion, net of Quest's cash and debt.
Stocks moved sharply higher during trading on Friday, extending the strong upward move seen late in the previous session. Much of the strength on Wall Street stemmed from a positive reaction to developments in Europe.
The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 277.83 points or 2.2 percent to 12,880.09, the Nasdaq soared 85.56 points or 3 percent to 2,935.05 and the S&P 500 surged up 33.12 points or 2.5 percent to 1,362.16.
With the strong gains on the day, the major averages all moved higher for the week. The Nasdaq rose by 1.5 percent, while Dow and the S&P 500 jumped 1.9 percent and 2 percent, respectively.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, with Australia's All Ordinaries Index advancing by 0.9 percent. However, Japan's Nikkei 225 Index bucked the uptrend and closed just below the unchanged line.
The major European markets are also showing notable moves to the upside on the day. The U.K.'s FTSE 100 Index is up by 0.5 percent, while the German DAX Index and the French CAC 40 Index have risen by 1 percent and 1.1 percent, respectively.
In commodities trading, crude oil futures are sliding $1.35 to $83.61 a barrel after jumping $5.02 or 6.5 percent to $84.96 a barrel in the week ended June 29th. Gold futures, which climbed $37.30 or 2.4 percent to $1,604.20 an ounce last week, are falling $12.40 to $1,591.80 an ounce.
On the currency front, the U.S. dollar retreated across the board last week, slipping 0.8 percent against both the yen and the euro. The greenback dropped to 79.79 yen and fell to $1.2666 versus the euro. The dollar is currently trading at 79.76 yen and is valued at $1.2604 versus the euro.
by RTT Staff Writer
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