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Stocks May See Further Downside In Early Trading - U.S. Commentary


Following the sell-off seen last Friday, stocks are likely to see further downside 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 168 points.

Concerns about higher interest rates may weigh on Wall Street, although analysts have noted that the markets are due for correction following recent strength.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of January.

The non-manufacturing index is expected to inch up 56.5 in January after dropping to 56.0 in December, with a reading above 50 indicating growth in the service sector.

With traders worried about the prospect of higher interest rates, stocks moved sharply lower over the course of the trading session on Friday. The sell-off on the day extended the pullback off record highs seen earlier this week.

The major averages ended the day just off their lows of the session. The Dow tumbled 665.75 points or 2.5 percent to 25,520.96, the Nasdaq slumped 144.92 points or 2 percent to 7,240.95 and the S&P 500 dove 59.85 points or 2.1 percent to 2,762.13.

For the week, the Dow plummeted by 4.1 percent, while the Nasdaq and the S&P 500 plunged by 3.5 percent and 3.9 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index plunged by 2.6 percent, while Hong Kong's Hang Seng Index slumped by 1.1 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index is down by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are down by 1.3 percent and 1.4 percent, respectively.

In commodities trading, crude oil futures are falling $0.36 to $65.09 a barrel after dipping $0.35 to $65.45 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,339.80, up $2.50 from the previous session's close of $1,337.30. On Friday, gold slumped $10.60.

On the currency front, the U.S. dollar is trading at 109.86 yen compared to the 110.17 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.2445 compared to last Friday's $1.2463.

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