Stocks May Show A Lack Of Direction In Early Trading - U.S. Commentary

After seeing substantial weakness last Friday, stocks may show a lack of direction in early trading on Monday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures down by just 5 points.

Uncertainty about the near-term outlook for the markets following Friday's sell-off is likely to contribute to choppy trading early in the session.

Worries about the outlook for the U.S. economy following the disappointing jobs report are likely to limit any potential bargain hunting.

A relatively light day on the U.S. economic front is also likely to keep trading activity subdued, although the Commerce Department is scheduled to release its report on factory orders at 10 am ET.

The report is expected to show a 0.1 percent increase in factory orders following a 1.5 percent drop in March. Orders for durable goods, which make up a large portion of factory orders, edged up by 0.2 percent in April.

Among individual stocks, Salesforce.com (CRM) could be in focus after announcing an agreement to acquire social media marketing platform Buddy Media for $689 million in cash and stock. The transaction is expected to be completed during salesforce.com's fiscal third quarter.

Bed Bath & Beyond (BBBY) also announced a deal to buy Linen Holdings for about $105 million in cash. The company said the acquisition will not have any effect on its first quarter results.

Shares of Charming Shoppes (CHRS) may also attract attention after the apparel retailer reported weaker than expected first quarter earnings and revenues.

Stocks moved sharply lower over the course of the trading day on Friday as traders reacted to a much weaker than expected jobs report. With the steep losses on the day, the markets extended the substantial downward move that was seen for much of May.

The major averages ended the session firmly in negative territory, just off their worst levels of the day. The Dow tumbled 274.88 points or 2.2 percent to 12,118.57, the Nasdaq plunged 79.86 points or 2.8 percent to 2,747.48 and the S&P 500 dove 32.29 points or 2.5 percent to 1,278.04.

With the steep losses on the day, the major averages all moved lower for the week. The Dow fell by 2.7 percent, while the Nasdaq and the S&P 500 dropped by 3.2 percent and 3 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region came under pressure on Monday following Friday's sell-off on Wall Street. Japan's Nikkei 225 Index tumbled 1.7 percent, while Hong Kong's Hang Seng Index plummeted by 2 percent.

Meanwhile, the major European markets have turned mixed on the day, with the French CAC 40 Index up by 0.7 percent, while the German DAX Index is down by 0.6 percent. The U.K. markets are closed for a public holiday.

In commodities trading, crude oil futures are sliding $0.98 to $82.25 a barrel after plunging $7.63 or 8.4 percent to $83.23 a barrel in the week ended June 1st. Gold futures, which rose $53.20 or 3.4 percent to $1,622.10 an ounce last week, are slipping $4.30 to $1,617.80 an ounce.

On the currency front, the U.S. dollar fell 2.1 percent against the Japanese yen last week to 78.01, while the greenback rose 0.7 percent against the euro to $1.2435. The dollar is currently trading at 78.11 yen and is valued at $1.2436 versus the euro.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT