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

wallstreet july20 10jan22 lt

After getting the New Year off to a rough start last week, stocks may 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 101 points.

Concerns about the economic impact of the Omicron variant of the coronavirus and the likelihood the Federal Reserve will raise interest rates in the near future may contribute to continued weakness on Wall Street.

Treasury yields have moved sharply higher in recent sessions, with the yield on the benchmark ten-year note reaching its highest levels since January of 2020.

The jump in yields comes amid a more hawkish tone from the Fed, as the minutes of the central bank's latest meeting indicated it plans to accelerate monetary policy normalization.

Worries about higher rates have led to particular weakness among high-growth tech stocks, dragging the tech-heavy Nasdaq down to its lowest closing level in almost three months last Friday.

Overall trading activity may be somewhat subdued, however, as trades look ahead to key inflation data as well as a Senate hearing on Fed Chair Jerome Powell's renomination.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on wholesale inventories in the month of November. Wholesale inventories are expected to jump by 1.2 percent.

Stocks fluctuated over the course of the trading day on Friday but finished the session mostly lower. While the Dow ended the day little changed, the S&P 500 and the Nasdaq closed lower for the fourth consecutive session.

The major averages all closed in negative territory, with the tech-heavy Nasdaq showing a particularly steep drop. The Nasdaq tumbled 144.96 points or 1 percent to 14,935.90, while the S&P 500 fell 19.02 points or 0.4 percent to 4,677.03 and the Dow edged down 4.81 points or less than a tenth of a percent to 36,231.66.

For the first week of the New Year, the Nasdaq saw its worst week since February of 2021, plunging by 4.5 percent. The S&P 500 also slumped by 1.9 percent, while the narrower Dow dipped by 0.3 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index rose by 0.4 percent, while South Korea's Kospi slumped by 1 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index are both down by 0.6 percent.

In commodities trading, crude oil futures are slipping $0.34 to $78.56 a barrel after falling $0.56 to $78.90 a barrel last Friday. Meanwhile, after rising $8.20 to $1,797.40 an ounce in the previous session, gold futures are edging down $4.20 to $1,793.20 an ounce.

On the currency front, the U.S. dollar is trading at 115.35 yen versus the 115.56 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1301 compared to last Friday's $1.1360.

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