The major U.S. index futures are pointing to a lower opening on Monday. Global cues are mixed, with the Asian averages having advanced in the session, while the European averages swinging into negative territory after a firmer start. The solid gains in the previous week may lead to some profit taking. Weaker oil prices may weigh down on the commodity space. Sentiment may also track the construction spending and the results of the manufacturing survey of the Institute for Supply Management to be released shortly after the markets open.
U.S. stocks began the week on a negative note in a day of extreme volatility. However, the major averages advanced solidly on Tuesday, encouraged by a rally in the rest of the global markets and bargain hunting at oversold levels. Notwithstanding the Fed handing out an interest rate reduction in-line with market expectations, the markets ended Wednesday's session on a mixed note amid volatility.
On Thursday, soothed by a smaller-than-expected contraction in third quarter growth, the major averages advanced solidly. Although stocks saw some weakness in early trading on Friday, they rallied strongly thereafter to end with notable gains.
During the week, the Dow Industrials gained 11.43% compared to a 10.88% advance by the Nasdaq Composite, while the S&P 500 Index rose 10.49%.
Among the sector indexes, the S&P Retail Index rallied 21.64% for the week and the Amex Airline Index gained 19.47%. The Philadelphia Housing Sector Index was up 18.31% for the week. The Amex Oil Index and the Philadelphia Oil Sector Index rose 17.04% and 16.90%, respectively. While the Amex Gold Bugs Index rose 14.93%, the Dow Jones Transportation Average advanced 12.68%. The Philadelphia Semiconductor Index rose 12.78% for the week.
Currency, Commodity Markets
Crude oil futures are currently receding $0.71 to $67.10 a barrel after seeing a modest gain in the week ended October 31st. A barrel of oil advanced $0.80 or 1.21 %to $66.21 a barrel.
Gold futures are rallying $14.10 to $732.30 an ounce after the commodity fell $12.10 or 1.70% to $718.20 an ounce in the previous session.
Currently, a dollar is trading at 98.44 yen and is worth 1.2796 versus then euro. The dollar traded on a mixed note last week, with the greenback gaining 5% against the yen to 98.61 yen, while it fell 5% against the euro to $1.2752 a euro. Last week, the stock market rally led traders to increase their carry trade bets, thereby weakening the yen against the other global currencies. Meanwhile, the dollar retreated against the euro following the Fed's 50-basis point interest rate reduction.
Asia
Stock markets across the Asia-Pacific region closed sharply higher on Monday, with the exception of China, as Wall Street's gains on Friday boosted investor confidence. However, fears of a recession loomed large, as South Korea unveiled a stimulus package to cushion the blow from the financial crisis. The Chinese stock market fell to a new two-year low on the back of gloomy manufacturing data, extending October's losses. The Japanese market remained closed on account of a public holiday. South Korea's Kospi remained above the unchanged line for most of the session before closing up 16.0 points or 1.4% at 1,129. The stock market witnessed a volatile trading session after banks rebounded following the release of additional economic stimulus measures aimed at revitalizing the slumping economy. However, some exporters trimmed their early gains or finished lower.
South Korea announced Monday that it will increase government spending by 14 trillion won next year as part of efforts to stimulate the slumping economy and help low-income households tide over the current financial turmoil. The amount included a 10 trillion won expansion in budget spending, 4 trillion won in tax incentives and other economic stimulus measures, according to the Finance Ministry.
South Korean automakers, including Hyundai Motor and its affiliate Kia Motors Corp., said that auto sales increased moderately in October, helped by demand for their fuel-efficient cars. Overall car sales in October rose 3.7% to 505,541 units, according to Hyundai and other carmakers.
Hynix Semiconductors rose 1.9%, but market heavyweight Samsung Electronics plunged 3.6%. LG Electronics climbed 1.9%, while LG Display tumbled 6.3%. Automaker Hyundai Motor shed 2.6% and top steel maker POSCO slipped 0.3%.
The Chinese stock market closed lower, as banks pared early gains after the central bank decided to remove the lending caps imposed at the start of the year and brokerages extended their losses on fresh worries over share supply pressures. The benchmark Shanghai Composite Index closed down 9.0 points or 0.5% at 1,719.8, its lowest level in 25 months, extending Friday's losses.
Meanwhile, the People's Bank of China said that it has abandoned the lending caps to help insulate the domestic economy from the global economic turmoil. Li Chao, a spokesman for the central bank, also suggested in a report carried by the official Xinhua news agency that the central bank might reduce interest rates further.
The Australian stock market rallied 5%, led by banks and miners, as expectations for an interest rate cut by 50 basis points on Tuesday increased following the release of worse-than-expected retail sales, house prices, and job ads data. The All Ordinaries index ended up 190.3 points, or 4.8%, to 4,173.0.
Index leader BHP Billiton jumped 6.8% and its rival and takeover target Rio Tinto gained 5.7% despite a drop in commodity prices on Friday. Among energy stocks, Oil Search added 3.3%, Santos advanced 3.6%, and Woodside Petroleum edged up 1.3%. Gold miners finished mixed despite higher gold prices in Sydney. Newmont Mining lost 4.2%, while Lihir Gold climbed 2.6% and Newcrest Mining added 2.1%.
Caltex, which warned that the unprecedented drop in the Australian dollar and commodity prices had hurt its 2008 earnings outlook, jumped 7.1%.
Financial stocks rallied strongly, while retailers also posted strong gains despite weak September household spending data. Woolworths surged 6.6%, Wesfarmers soared 13.4%, and Harvey Norman gained 4.7%.
Europe
The major European averages are trading lower on Monday. The German DAX Index is dropping 0.16%, while the U.K.'s FTSE 100 Index is receding 0.45%. The French CAC 40 Index is trading down 0.42%.
The European Commission said today that economic growth in the 15 nations sharing the euro will slow to 0.1% in 2009 from 1.2% in 2008. For 2010, the agency estimates growth of 0.9%.
Economic Reports
Wachovia Securities expects a 25-basis point easing in December to 0.75%, and the recession that appears underway is likely to keep the Fed ease on liquidity provision going forward until mid-Spring of next year. Therefore, short-term interest rates are likely to remain low for an extended period of time.
As everyone keep their fingers crossed over the likely time frame for a recovery, each piece of economic evidence will be scanned for clues. The upcoming week's calendar is moderately heavy and has some key economic reports that will help gauge the degree of weakness experienced by the economy. Traders are likely to focus on October's non-farm payroll employment report and the results of the Institute for Supply Management's manufacturing and non-manufacturing surveys for October.
Additionally, market participants could also attach some significance to the National Association of Realtors' pending home sales index for September, the Commerce Department's factory goods orders report for September, the construction spending report and the Labor Department's preliminary third quarter productivity & costs report. Other reports that could draw attention are the regularly scheduled weekly oil inventory and jobless claims reports, the Commerce Department's wholesale inventories report and the Federal Reserve's consumer credit report.
The U.S. economy is expected to show job losses for the tenth consecutive month in October. Initial and continuing claims for unemployment benefits showed sharp gains, pointing to weakness in non-farm payroll numbers. Wachovia expects broad based weakness in the employment numbers for October, which is consistent with past recessions. The unemployment rate is likely to tick up to 6.2%, with Wachovia predicting an unemployment rate of 8% by 2010.
The ISM's manufacturing purchasing managers' index is likely to decline further, with a possible decline in new orders and order backlogs signaling more weakness in the pipeline. The regional surveys, namely the New York Fed's empire state manufacturing survey, the Philadelphia Fed's survey and the NAPM-Chicago survey showed deterioration in manufacturing activity in the month. The Commerce Department's construction spending report to be released at 10 AM ET on Monday is expected to show that construction spending declined 0.8% in September.
In August, construction spending was unchanged compared to expectations for a 0.5% decline. Residential construction spending, excluding improvements, which is used for calculating GDP, fell 4.1%, while private non-residential spending fell 0.8% following a 1.1% drop in July. On the other hand, public construction spending rose 0.8% in August, extending the 1.3% seen in July.
The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 AM ET on the same day. Economists expect the index to show a reading of 42 for October.
The index declined sharply to 43.5 in September from 49.9 in the previous month, marking the biggest monthly decline since 1984. The new orders index fell by about 10 points to 38.8, while the production index also plummeted to 40.8. However, BMO Capital Markets noted that the weakness may have been overstated due to the Boeing strike and the impact of the hurricanes, as the regional surveys did not point to a slowdown anywhere close to the national survey.
On a positive note, the prices paid index slumped 23.5 points, representing the biggest drop on record. Although the export orders index slipped, it stayed above the '50' level at 52.
Earnings
American Tower Corp. (AMT) said its third quarter revenues rose 11.3% to $409.3 million. The company's earnings per share rose to 15 cents per share from 14 cents per share last year. Analysts expected earnings of 14 cents per share on revenues of $401.58 million.
DaVita (DVA) reported third quarter earnings of 89 cents per share on revenues of $1.45 billion. Analysts, on average, expected earnings of 89 cents per share on revenues of $1.42 billion. The company said it expects operating income for 2008 to be near the middle of the range of its previously provided outlook of $800-$840 million.
DryShip's (DRYS) third quarter revenues of $228.16 million compared to $140.49 million last year. Earnings per share nearly doubled to $4.21 per share. The consensus estimates had called for earnings of $3.60 per share on revenues of $306.04 million.
Sysco (SYY) said its first quarter sales rose 5% to $9.9 billion and diluted earnings per share increased to 46 cents per share from 43 cents per share in the year-ago period. Analysts expected earnings of 47 cents per share on revenues of $9.88 billion.
Stocks in Focus
Delta Air Lines (DAL) may be in focus after it announced that its Executive Vice President Steve Gorman has been appointed as Vice Presisent and COO. Hank Halter, an insider, is being promoted to the role of Senior Vice President and CFO. Additionally, the company also announced a few internal promotions.
Fidelity National Financial (FNF) is likely to react to its announcement that it will receive $58 million from the Reserve Primary Fund following the liquidation of the fund last month. . The company said it would use the amount to repay a loan it took in September.
ICO Global Communications (ICOG) may see some strength after it said a Los Angeles Supreme Court awarded the company $236 million in punitive damages in a case with Boeing (BA) and its Boeing Satellite Services International subsidiary. The award is in addition to the $371 million awarded last week after Boeing was found liable for fraud, tortious interference and breach of conduct.
Research In Motion (RIMM) is expected to come under selling pressure after it said Mformation Technologies has filed a patent infringement lawsuit against Research In Motion, claiming that the company's blackberry device infringes two of its patents related to methods of remote device management.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.