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Futures Pointing To Roughly Flat Open On Wall Street

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The major U.S. index futures are pointing to a roughly flat opening on Monday as traders may be reluctant to make any significant moves.

Traders may stick to the sidelines ahead of the release of earnings news from a number of big-name companies later this week.

Bank of America (BAC), Goldman Sachs (GS), UnitedHealth (UNH), IBM (IBM), American Express (AXP), Microsoft (MSFT), Visa (V), and General Electric (GE) are among the companies due to report their quarterly results this week.

Stocks moved mostly higher over the course of the trading session on Friday, extending the upward trend seen over the past several sessions. With the gains on the day, the Dow and the S&P 500 reached new record closing highs.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Dow rose 84.65 points or 0.4 percent to 21,637.74, the Nasdaq advanced 38.03 points or 0.6 percent to 6,312.47 and the S&P 500 climbed 11.44 points or 0.5 percent to 2,459.27.

For the week, the Nasdaq surged up by 2.6 percent, while the Dow and the S&P 500 jumped by 1 percent and 1.4 percent, respectively.

The strength on Wall Street came following the release of several key economic reports, with the data suggesting that the Federal Reserve will not be in any hurry to raise interest rates.

Before the start of trading, the Commerce Department released a report showing retail sales unexpectedly decreased for the second consecutive month in June.

The Commerce Department said retail sales fell by 0.2 percent in June after edging down by a revised 0.1 percent in May. The continued drop in sales surprised economists, who had expected sales to inch up by 0.1 percent.

Excluding auto sales, retail sales still dipped by 0.2 percent in June following the 0.3 decline seen in May. Ex-auto sales were expected to rise by 0.2 percent.

A separate report released by the Labor Department showed consumer prices came in unchanged in the month of June.

The Labor Department said its consumer price index was flat in June after edging down by 0.1 percent in May. Economists had expected consumer prices to inch up by 0.1 percent.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent for the third consecutive month. Core prices had been expected to rise by 0.2 percent.

The report said consumer prices in June were up by 1.6 percent compared to the same month a year ago, a deceleration from the 1.9 percent year-over-year growth in May.

The annual rate of growth in core consumer prices came in at 1.7 percent in June, unchanged from the previous month.

"With its dual mandate, the Fed needs to take into account the decline in the unemployment rate this year as well as the drop back in core inflation," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

"For that reason, we still expect the Fed to continue raising interest rates in the second half of this year," he added. "Nevertheless, the odds of a September rate hike are fading."

Meanwhile, the Federal Reserve released a report showing industrial production increased by slightly more than anticipated in the month of June.

The Fed said industrial production climbed by 0.4 percent in June after inching up by a revised 0.1 percent in May. Economists had expected production to rise by 0.3 percent.

Weakness among financial stocks limited the upside for the markets, with Wells Fargo (WFC), Citigroup (C), and JPMorgan Chase (JPM) all closing lower after reporting their second quarter results.

Electronic storage stocks showed a strong move to the upside over the course of the session, driving the NYSE Arca Disk Drive Index up by 2.1 percent. The index climbed to its best closing level in over a month.

Within the storage sector, NetApp (NTAP) posted a standout gain, surging up by 5.5 percent to its best closing level in over three years.

Significant strength was also visible among gold stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the sector came amid a notable increase by the price of gold. Oil service stocks also saw considerable strength amid an increase by the price of crude oil. \

Telecom, semiconductor, and tobacco stocks also saw notable strength on the day, while some weakness was visible among banking stocks.

Commodity, Currency Markets

Crude oil futures are slipping $0.11 to $46.43 a barrel after rising $0.46 to $46.54 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,232.80, up $5.30 from the previous session's close of $1,227.50. On Friday, gold jumped $10.20.

On the currency front, the U.S. dollar is trading at 112.49 yen compared to the 112.53 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1469 compared to last Friday's $1.1470.

Asia

Asian stocks rose broadly on Monday as weak U.S. retail sales and inflation data served to cool Fed rate hike speculation and data showed the Chinese economy grew more than expected in the second quarter. The Japanese markets were closed for the Marine Day holiday.

Chinese shares tumbled as a series of profit warnings from small-cap companies and the government's focus on increased regulatory scrutiny overshadowed encouraging GDP data.

The benchmark Shanghai Composite index fell 45.95 points or 1.43 percent to 3,176.46 while Hong Kong's Hang Seng index was up 85 points or 0.32 percent at 26,473 in late trade.

China's GDP grew 6.9 percent year-on-year in the second quarter of 2017, the National Bureau of Statistics said . That was unchanged from the previous quarter and exceeded expectations for a rise of 6.8 percent.

On a quarterly basis, GDP growth stood at 1.7 percent - in line with expectations and up from 1.3 percent in the previous three months.

Retail sales jumped an annual 11.0 percent in June, beating forecasts for 10.6 percent and up from 10.7 percent in May, while industrial output climbed 7.6 percent from last year, topping expectations for an increase of 6.5 percent. Fixed asset investment gained an annual 8.6 percent - unchanged from the previous month and beating forecasts for 8.5 percent.

Australian shares ended a choppy session slightly lower as banks lost ground, offsetting gains in the material and energy sectors. The benchmark S&P/ASX 200 index slid 9.60 points or 0.17 percent to 5,755.50 while the broader All Ordinaries index finished down 7.90 points or 0.14 percent at 5,800.80.

The big four banks fell between 0.2 percent and 0.7 percent ahead of this week's APRA announcement of new capital rules for major banks. Insurer Medibank Private tumbled 3.8 percent and Insurance Australia Group declined 0.9 percent while investment bank Macquarie Group closed marginally higher.

Telecom giant Telstra fell 1.9 percent on concerns that its dividend may be cut. Mining stocks bucked the weak trend, with Fortescue Metals Group rallying 1.9 percent and South32 climbing as much as 4.7 percent. Oil & gas producer Santos jumped 2.7 percent and Oil Search advanced 1.7 percent.

Europe

European stocks fell slightly in choppy trade on Monday despite another record close on Wall Street Friday and positive cues from Asia after Chinese GDP data beat estimates.

China's GDP grew 6.9 percent year-on-year in the second quarter of 2017, the National Bureau of Statistics said . That was unchanged from the previous quarter and exceeded expectations for a rise of 6.8 percent.

Closer home, final data from Eurostat showed that Eurozone inflation slowed to a 6-month low in June as estimated. Inflation eased slightly to 1.3 percent in June from 1.4 percent in May. The rate came in line with the flash estimate published on June 30.

Another report from property website Rightmove revealed that U.K. house prices increased only marginally in July as subdued wage growth weighed on affordability. Asking prices edged up 0.1 percent in July from June. On a yearly basis, house prices advanced 2.8 percent.

The pan-European Stoxx Europe 600 index was down 0.15 percent at 386.25 in late opening deals after closing 0.2 percent higher on Friday.

The German DAX was declining half a percent and France's CAC 40 index was losing 0.3 percent while the U.K.'s FTSE 100 was moving up 0.2 percent.

Swedish medical technology firm Getinge slumped 7 percent after its second-quarter core earnings fell below analysts' estimates.

German food-processing machinery maker GEA tumbled 6 percent after cutting its 2017 profit guidance.

German automakers were subdued after reports that the country is considering "effective measures" to cut pollution from diesel engines.

On the positive side, Norway's Telenor soared 8 percent after the telecoms firm raised its outlook for 2017 earnings margins.

Weir Group shares also jumped 8 percent in London. The pumps manufacturer upgraded its outlook for the group's full-year performance, citing an accelerated recovery in the Northern American oil and gas markets.

AstraZeneca rallied nearly 2 percent after the pharmaceutical firm said chief executive Pascal Soriot will host a call with analysts on second-quarter earnings at the end of the month as planned.

Broadcaster ITV climbed 3 percent as it appointed the boss of EasyJet, Carolyn McCall, as its new chief executive.

Miner Anglo American rallied 2.1 percent, Antofagasta advanced 1.5 percent and Glencore gained 1.7 percent as copper hit its highest level in two weeks, supported by a weaker dollar and upbeat GDP data from China.

U.S. Economic Reports

Activity in the New York manufacturing sector grew at a notably slower pace in the month of July, according to a report released by the Federal Reserve Bank of New York.

The New York Fed said its general business conditions index dropped to 9.8 in July from '19.8 in June, although a positive reading still indicates growth. Economists had expected the index to fall to 15.0

Later this week, reports on import and export prices, homebuilder confidence, housing starts, and Philadelphia-area manufacturing activity may attract attention.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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