After seeing some strength last week, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a mixed open for the markets. While the Do futures are down by 20 points, the Nasdaq futures are up by 3 points.
A relatively light day on both the corporate and economic news fronts is likely to keep trading activity relatively subdued as traders digest the recent upward move by the markets.
With the major averages at their best levels in over three months, some traders may look to cash in on the recent strength.
Disappointing quarterly results from Lowe's (LOW: Quote) may also generate some negative sentiment, with the home improvement retailer falling by 6.5 percent in pre-market trading.
Lowe's reported second quarter earnings of $0.64 per share on sales of $14.3 billion, while analysts had expected earnings of $0.70 per share on sales of $14.5 billion. The company also provided disappointing full-year earnings guidance.
On the other hand, shares of Coventry Health Care (CVH: Quote) are likely to move sharply higher after the health insurer agreed to be acquired by rival Aetna (AET: Quote) in a transaction valued at $7.3 billion, including the assumption of Coventry debt.
Under the terms of the agreement, Coventry stockholders will receive $27.30 in cash and 0.3885 Aetna common shares for each Coventry share, or $42.08 per share based on Aetna's closing on Friday.
Traders are also likely to keep an eye on developments in Europe amid reports suggesting that Greek Prime Minister Antonis Samaras will meet with European officials this week to seek an extension for the nation's reforms.
Meanwhile, Germany's Spiegel magazine reported that the European Central Bank is considering setting limits on the yields of Eurozone sovereign bonds. The central bank will intervene and buy the bonds if their interest rates exceed a pre-determined threshold above German bonds.
The report also suggested that the ECB will make a decision on the proposal at its governing council meeting in September.
Stocks ended Friday's trading with modest gains, extending a recent upward trend. A choppy session ended with some upward momentum going into the close. Better-than-expected economic news solidified market sentiment.
The major averages moved to the upside going into the close, ending the day modestly higher. The Dow edged up 25.09 points or 0.2 percent at 13,275.20, the Nasdaq rose 14.20 points or 0.5 percent to 3,076.59 and the S&P 500 climbed 2.65 points or 0.2 percent to 1,418.16.
With the gains on the day, the major averages all closed higher for the week. The Nasdaq surged up by 1.8 percent, while the Dow and the S&P 500 both rose for the sixth straight week, advancing by 0.5 percent and 0.9 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 crept up by 0.1 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.
The major European markets have also turned mixed on the day. While the German DAX Index is up by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are down by 0.2 percent and 0.4 percent, respectively.
In commodities trading, crude oil futures are edging down $0.03 to $95.98 a barrel after advancing $3.14 or 3.4 percent to $96.01 a barrel in the week ended August 17th. Gold futures, which dipped $3.40 or 0.2 percent to $1,619.40 an ounce last week, are sliding $5.50 to $1,613.90 an ounce.
On the currency front, the U.S. dollar rose 1.7 percent against the Japanese yen last week before ending at 79.56 yen. Meanwhile, the greenback fell 0.4 percent against the euro, ending the week at $1.2335. The dollar is currently trading at 79.51 yen and is valued at $1.2309 versus the euro.
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by RTT Staff Writer
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