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


Following the pullback seen last Friday, stocks are likely to show a lack of direction in early trading on Monday. The major index futures are currently pointing to a slightly lower open for the markets, with the Dow futures down by 22 points.

Traders may be reluctant to make significant moves ahead of the highly anticipated midterm elections on Tuesday, which will decide control of both the House and Senate.

Democrats are seen as having a much better chance to claim a majority in the House than in the Senate, but controlling the lower chamber would still allow Democrats to hinder President Donald Trump's agenda.

The Federal Reserve's looming monetary policy announcement may also keep some traders on the sidelines, with the Fed due to announce is latest decision on Thursday.

While the Fed is widely expected to leave interest rates unchanged, traders will keep a close eye on the accompanying statement for clues about an expected rate hike in December.

On the U.S. economic front, the Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of October shortly after the start of trading.

The ISM's non-manufacturing index is expected to pull back to 59.5 in October after climbing to 61.6 in September, although a reading above 50 would still indicate growth in the service sector.

After moving notably higher for a few sessions, stocks gave back some ground during the trading day on Friday. The major averages initially moved to the upside but pulled back into negative territory as the session progressed.

The major averages ended the day in the red but well off their lows of the session. The Dow fell 109.91 points or 0.4 percent to 25,270.83, the Nasdaq slumped 77.06 points or 1 percent to 7,356.99 and the S&P 500 slid 17.31 points or 0.6 percent to 2,723.06.

Despite the pullback on the day, the major averages moved significantly higher for the week. The Nasdaq surged up by 2.6 percent, while the Dow and the S&P 500 both jumped by 2.4 percent.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index plunged by 2.1 percent.

Meanwhile, the major European markets have shown modest moves to the upside on the day. While the U.K.'s FTSE 100 Index has risen by 0.3 percent, the French CAC 40 Index and the German DAX Index are both up by 0.2 percent.

In commodities trading, crude oil futures are edging up $0.16 to $63.30 a barrel after sliding $0.55 to $63.14 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,229.30, down $4 from the previous session's close of $1,233.30. On Friday, gold fell $5.30.

On the currency front, the U.S. dollar is trading at 113.24 yen compared to the 113.20 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1375 compared to last Friday's $1.1388.

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