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Stocks May Give Back Ground Following Recent Strength - U.S. Commentary


After moving higher in each of the past five weeks, stocks are likely to give back some ground in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 68 points.

Profit taking is likely to contribute to any early weakness on Wall Street, as traders may look to cash in on the recent strength in the markets.

The recent gains have lifted the Dow and the S&P 500 to five-year highs, with the Dow climbing above 14,000 for the first time since October of 2007. However, some analysts have suggested that the markets have become overbought.

Not long after the open, trading could be impacted by the release of the Commerce Department's report on factory orders in the month of December.

Economists expect factory orders to surge up by 2.4 percent in December after inching up by less than a tenth of a percent in November.

Durable goods orders, which make up the bulk of factory orders, jumped 4.6 percent in December due largely to an 11.9 percent increase in orders for transportation equipment.

Among individual stocks, shares of Acme Packet (APKT) are moving sharply higher in pre-market trading after the networking company agreed to be acquired by Oracle (ORCL) for $29.25 per share.

The offer, which represents a fully diluted equity value of $2.1 billion, reflects a 22.2 percent premium to Acme Packet's closing price on Friday.

Clorox (CLX), Sysco (SYY), and Gannett (GCI) are also likely to be in focus after reporting their quarterly results before the start of trading.

Stocks moved sharply higher over the course of the trading day on Friday, benefiting from a positive reaction to the latest batch of U.S. economic data.

The major averages moved roughly sideways going into the close, ending the session near their best levels of the day. The Dow jumped 149.21 points or 1.1 percent to 14,009.79, the Nasdaq soared 36.97 points or 1.2 percent to 3,179.10 and the S&P 500 surged up 15.06 points or 1 percent to 1,513.17.

With the gains on the day, the major averages moved higher for the fifth consecutive week. The Dow rose by 0.8 percent for the week, while the Nasdaq and the S&P 500 advanced by 0.9 percent and 0.7 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Monday. Japan's Nikkei 225 Index advanced by 0.6 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets have all moved sharply lower on the day. While the U.K.'s FTSE 100 Index has fallen by 1.3 percent, the French CAC 40 Index and the German DAX Index are both down by 1.6 percent.

In commodities trading, crude oil futures are sliding $1.17 to $96.60 a barrel after advancing $1.89 or 2 percent to $97.77 a barrel in the week ended February 1st. Gold futures, which rose $14 or 0.9 percent to $1,670.60 an ounce last week, are falling $5.70 to $1,664.90 an ounce.

On the currency front, the U.S. dollar fell 1.3 percent against the euro last week before ending the week at $1.3639. Meanwhile the greenback rose 2.1 percent against the Japanese yen to 92.77 yen. The dollar is currently trading at 92.68 yen and is valued at $1.3568 against the euro.

by RTTNews Staff Writer

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