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U.S. Stocks May Extend Recent Sell-Off In Early Trading

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to extend the sell-off seen last week.

Concerns about tightening monetary policy may continue to weigh on the markets ahead of this week's Federal Reserve meeting.

The Fed is scheduled to begin a two-day meeting on Tuesday, with the latest monetary policy decision due Wednesday afternoon.

While the Fed is likely to leave interest rates unchanged, the accompanying statement could hint at the first rate hike as early as the next meeting in mid-March.

Recent downward momentum may also contribute to initial weakness on Wall Street after the S&P 500 saw its worst week since March of 2020 last week.

Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines ahead of the Fed meeting.

Along with the Fed announcement, reports on consumer confidence, new home sales, durable goods orders and personal income and spending may attract attention in the coming days.

The major U.S. markets were down again on Friday, hugging both sides of the unchanged line in the morning before going into freefall in the afternoon to end in the red for the fourth straight session.

For the day, the Dow plummeted 450.02 points or 1.3 percent to finish at 34,265.37, while the Nasdaq plunged 385.10 points or 2.7 percent to close at 13.768.92 and the S&P 500 tumbled 84.79 points or 1.9 percent to end at 4,397.94.

With the continued sell-off, major averages also moved sharply lower for the week. The Dow showed a 4.6 percent nosedive, while the S&P 500 and the Nasdaq plummeted by 5.7 percent and 7.6 percent, respectively.

The particularly harsh drop on the Nasdaq was fueled by a weak earnings report from Netflix (NFLX), which set off a cascade of selling pressure among the other markets.

Surging bond prices also drove the markets lower, exacerbating interest rate concerns; most analysts believe a rate hike of at least 25 basis points from the Federal Reserve is imminent in March.

Also on Friday, Treasury Secretary Janet Yellen offered her view that U.S. economic policy improves on Reagan-era supply-side economics.

"Modern supply-side economics seeks to spur economic growth by both boosting labor supply and raising productivity, while reducing inequality and environmental damage," Yellen told the World Economic Forum's virtual Davos gathering.

In economic news, the Conference Board's leading economic index ticked slightly higher and was in line with expectations.

Commodity, Currency Markets

Crude oil futures are slumping $1.09 to $84.05 a barrel after falling $0.41 to $85.14 a barrel last Friday. Meanwhile, after sliding $10.80 to $1,831.80 an ounce in the previous session, gold futures are rising $8 to $1,839.80 an ounce.

On the currency front, the U.S. dollar is trading at 113.69 yen versus the 113.68 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1303 compared to last Friday's $1.1344.

Asia

Asian stocks fell broadly on Monday, with U.S.-Russia tensions over Ukraine and fears about the Fed tightening monetary policy more aggressively in 2022 weighing on sentiment.

Investors also awaited the U.S. fourth-quarter GDP data, the outcome of a Federal Reserve meeting and a slew of U.S. earnings reports due throughout the week for directional cues.

Chinese shares fluctuated before ending little changed after a former member of the monetary policy committee of the People's Bank of China said looser monetary policy won't be sufficient and more government spending is needed to drive economic recovery. Hong Kong's Hang Seng Index slid 309.09 points, or 1.2 percent, to 24,656.46.

Japanese shares edged up slightly after a survey showed the country's factory activity grew at the fastest pace in four years in January. The Nikkei 225 Index rose 66.11 points, or 0.2 percent, to 27,588.37, while the broader Topix ended 0.1 percent higher at 1,929.87.

Australian markets hit an eight-month low, with technology names and commodity-related stocks leading the losses. The benchmark S&P/ASX 200 Index dropped 36.30 points, or 0.5 percent, to 7,139.50 - marking its lowest close since May 27.

The broader All Ordinaries Index ended down 48.60 points, or 0.7 percent, at 7,441.50. South32 shares fell 3.7 percent after the diversified miner warned of labor issues from the pandemic.

Home furnishing retailer Adairs plunged 21.5 percent on a weak earnings outlook. Fiber infrastructure provider Uniti Group jumped 9.3 percent after saying "more than one party" have shown interest in buying the company.

Seoul stocks hit a 13-month low as investors remained apprehensive ahead of the U.S. Federal Reserve's policy meeting this week. The Kospi tumbled 42.29 points, or 1.5 percent, to 2,792, closing below the 2,800-point mark for the first time since December 23, 2020.

Internet portal operator Naver dropped 1.4 percent, automaker Hyundai Motor shed 1.5 percent, chemical behemoth LG Chem lost 3.3 percent and financial heavyweight KB Financial Group declined 2.5 percent.

Europe

European stocks have moved sharply lower on Monday, with concerns over policy tightening by the Federal Reserve and rising tensions about Russia's military buildup on the Ukraine border weighing on sentiment.

Meanwhile, Eurozone private sector growth eased in January as the Omicron variant hit the services activity, flash survey results from IHS Markit showed.

The flash composite output index slid to an 11-month low of 52.4 in January, from 53.3 in December. The score was forecast to fall to 52.6. British business activity also cooled unexpectedly this month to an 11-month low.

While the U.K.'s FTSE 100 Index has tumbled by 1.5 percent, the German DAX Index and the French CAC 40 Index are down by 2.4 percent and 2.6 percent, respectively.

Technology stocks are broadly lower after Wall Street's tech rout on Friday saw the S&P 500 and Nasdaq Composite log their biggest weekly percentage drops since the onset of the pandemic.

Shell has also moved to the downside in London after confirming its name has changed from Royal Dutch Shell plc to Shell plc.

Commerzbank AG has also dropped. The lender said that its fourth quarter earnings would be impacted by provisions made at its Polish mBank, but it still expects a positive net result for the financial year 2021.

On the other hand, Vodafone has moved sharply higher on reports that it was in talks with Iliad to combine their operations in Italy.

Unilever has also shown a strong move to the upside after reports that activist investor Nelson Peltz has built a stake in the consumer goods company.

Renault has also jumped. The French carmaker, Japan's Nissan Motor and Mitsubishi Motors are soon going to work together to develop electric vehicles. The trio is expected to invest more than 20 billion euros over the next five years.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of this month's auction of $54 billion worth of two-year notes at 1 pm ET.

Stocks In Focus

Shares of Kohl's (KSS) are soaring in pre-market trading after a report from the Wall Street Journal said a consortium backed by activist hedge fund Starboard Value LP has offered to acquire the department store operator for roughly $9 billion.

Media company Fox Corp. (FOXA) may also move to the upside after UBS upgraded its rating on the company's stock to Buy from Neutral.

On the other hand, shares of Snap (SNAP) are seeing notable pre-market weakness after Wedbush downgraded its rating on the social media company's stock to Neutral from Outperform.

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