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

wallstreet4 01jun20 lt

Following the strong upward move seen in May, stocks may show a lack of direction in early trading on the first day of June. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 2 points.

Traders may be reluctant to make significant moves following the recent strength on Wall Street, which has lifted the Nasdaq back within striking distance of its record highs.

The major averages all moved sharply higher last month amid optimism about the economy reopening, with the Dow and the S&P 500 spiking by 4.3 percent and 4.5 percent, respectively, while the Nasdaq soared by 6.8 percent.

Some positive sentiment may be generated in reaction to a private survey showing the Chinese manufacturing sector expanded in May.

The Caixin manufacturing PMI score came in at 50.7 in May, beating expectations for a score of 49.6 and up from 49.4 in April. A reading above 50 indicates an expansion in manufacturing activity.

At the same time, traders may be somewhat unnerved by the political unrest across the country following the death of George Floyd, with a number of major retailers temporarily closing their stores in areas hit hard by protests.

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

The purchasing managers index is expected to climb to rise to 43.0 in May from 41.5 in April, although a reading below 50 would still indicate a contraction in manufacturing activity.

The Commerce Department is also scheduled to release its report on construction spending in the month of April. Economists expect construction spending to plunge by 6.0 percent.

Stocks showed wild swings over the course of the trading day on Friday before eventually ending the session mostly higher. With the upward move, the Nasdaq reached a new three-month closing high and the S&P 500 ended the day at its best closing level since early March.

The major averages moved to the upside late in the session as traders reacted positively to President Donald Trump's highly anticipated press conference about China.

The Dow slipped into the red in the final minutes of trading, edging down 17.53 points or 0.1 percent to 25,383.11, but the broader Nasdaq and the S&P 500 closed firmly positive. The Nasdaq jumped 120.88 points or 1.3 percent to 9,489.87 and the S&P 500 climbed 14.58 points or 0.5 percent to 3,044.31.

For the holiday-shortened week, the Dow spiked by 3.8 percent, the S&P 500 soared by 3 percent and the Nasdaq surged up by 1.8 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index climbed by 0.8 percent, while Hong Kong's Hang Seng Index jumped by 3.4 percent.

European stocks have also moved to the upside on the day, although several major markets are closed for public holidays. While the U.K.'s FTSE 100 Index has advanced by 0.9 percent, the French CAC 40 Index is up by 1 percent.

In commodities trading, crude oil futures are slipping $0.20 to $35.29 a barrel after spiking $1.78 to $35.49 a barrel last Friday. Meanwhile, after jumping $23.40 to $1,751.70 an ounce in the previous session, gold futures are sliding $6.30 to $1,745.40 an ounce.

On the currency front, the U.S. dollar is trading at 107.68 yen versus the 107.83 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at 1.1106 compared to Friday's $1.1101.

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