With traders reacting to a disappointing retail sales report, stocks are likely to move to the downside in early trading on Monday. The major index futures are currently pointing to a moderately lower open for the markets, with the Dow futures down by 44 points.
The downward momentum for the markets comes following the release of a report from the Commerce Department showing an unexpected drop in retail sales in the month of June.
The report showed that retail sales fell by 0.5 percent in June following a 0.2 percent decrease in May. The drop surprised economists, who had expected sales to edge up by 0.2 percent.
Excluding a drop in sales by motor vehicle and parts dealers, retail sales still fell by 0.4 percent in June, matching the decrease seen in the previous month.
Peter Boockvar, managing director at Miller Tabak, said, "Headline retail sales are now down 3 months in a row, due maybe to some give back after the mild winter but also coincides with lackluster job growth."
While the disappointing sales data has added to recent concerns about the economic outlook, a separate report from the New York Federal Reserve showed stronger than expected growth in regional manufacturing activity.
The New York Fed said its general business conditions index rose to 7.4 in July from 2.3 in June, with a positive reading indicating growth in the manufacturing sector. Economists had expected the index to show a more modest increase to a reading of 4.5.
A positive reaction to quarterly results from Citigroup (C) may also help to limit the downside for the markets, with the financial giant moving higher in pre-market trading.
Citigroup reported second quarter earnings that fell year-over-year but still came in above analyst estimates. At the same time, revenue for quarter dropped by slightly more than anticipated.
Nonetheless, trading activity may be somewhat subdued ahead of Congressional testimony from Federal Reserve Chairman Ben Bernanke as well as the release of a slew of other key earnings news and economic data later in the week.
After trending lower in recent sessions, stocks showed a strong move back to the upside over the course of the trading day on Friday. The markets benefited from a positive reaction to some Chinese economic data as well as JP Morgan's (JPM) quarterly results.
The major averages saw continued strength going into the close, ending the day firmly in positive territory. The Dow jumped 203.82 points or 1.6 percent to 12,777.09, the Nasdaq surged up 42.28 points or 1.5 percent to 2,908.47 and the S&P 500 soared 22.02 points or 1.7 percent to 1,356.78.
With the day's strong gains, the major averages turned in a mixed performance for the week. While the Nasdaq still fell 1 percent for the week, the S&P 500 rose by 0.2 percent and the Dow edged up by less than 0.1 percent.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a public holiday. While Hong Kong's Hang Seng Index edged up by 0.2 percent, China's Shanghai Composite Index tumbled by 1.7 percent.
Meanwhile, the major European markets are all seeing modest weakness on the day. The U.K.'s FTSE 100 Index is down by 0.1 percent, the German DAX Index is down by 0.2 percent, and the French CAC 40 Index is down by 0.4 percent.
Crude oil futures are sliding $0.34 to $86.76 a barrel after advancing $2.65 or 3.1 percent to $87.10 a barrel in the week ended July 13th. Gold futures, which rose $13.10 or 0.8 percent to $1,592 last week, are falling $5.10 to $1,586.90 an ounce.
On the currency front, the U.S. dollar slipped 0.6 percent against the Japanese yen last week to 79.20 yen. Meanwhile, the greenback crept up 0.3 percent against the euro to $1.2249. The dollar is currently trading at 78.87 yen and is valued at $1.2217 versus the euro.
by RTT Staff Writer
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