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Futures Pointing To Initial Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to regain ground following a dismal September.

Bargain hunting may contribute to initial strength on Wall Street after stocks tumbled to their lowest levels since late 2020 in the previous session.

Early trading activity may be somewhat subdued, however, as traders look ahead to the release of the Labor Department's closely watched monthly jobs report on Friday.

Stocks fluctuated in morning trading on Friday before once again coming under pressure over the course of the afternoon. The major averages extended the sharp pullback seen on Thursday, ending the session at their lowest closing levels since late 2020.

The major averages saw further downside going into the close, ending the session just off their worst levels of the day. The Dow plunged 500.10 points or 1.7 percent to 28,725.51, the Nasdaq tumbled 161.89 points or 1.5 percent to 10,575.62 and the S&P 500 slumped 54.85 points or 1.5 percent to 3,585.62.

For the week, the Nasdaq dove by 2.7 percent, while the Dow and the S&P 500 both plunged by 2.9 percent. The major averages also posted steep losses for the month and the quarter.

The extended sell-off on Wall Street reflected lingering concerns about the global economic outlook amid aggressive interest rate hikes by central banks around the world.

Adding to the negative sentiment, a reading on inflation said to be preferred by the Federal Reserve showed an acceleration in the pace of core consumer price growth in the month of August.

The Commerce Department report showed the annual rate of core consumer price growth accelerated to 4.9 percent in August from a revised 4.7 percent in July.

Economists had expected the annual rate of growth in core consumer prices, which exclude food and energy prices, to tick up to 4.7 percent from the 4.6 percent originally reported for the previous month.

The faster rate of price growth is likely to convince the Fed that it must maintain is aggressive stance regarding future rate hikes.

Meanwhile, the University of Michigan released a separate report showing one-year inflation expectations edged down to 4.7 percent in September from 4.8 percent in August, hitting the lowest level since last September.

Five-year inflation expectations also dipped to 2.7 percent in September from 2.9 percent in August, falling below the 2.9-3.1 percent range for the first time since July 2021.

"Inflation expectations are likely to remain relatively unstable in the months ahead, as consumer uncertainty over these expectations remained high and is unlikely to wane in the face of continued global pressures on inflation," said Hsu.

MNI Indicators also released a report showing an unexpected contraction in Chicago-area business activity in the month of September.

A steep drop by shares of Nike (NKE) weighed on the Dow, with the athletic footwear and apparel giant plunging by 12.8 percent.

Nike fell sharply after reporting better than expected fiscal first quarter earnings and revenues but warning it will need to cut prices amid a surge in inventories.

Interest rate-sensitive utilities stocks moved sharply lower over the course of the session, dragging the Dow Jones Utility Average down by 1.9 percent to its lowest closing level in over three months.

Significant weakness was also visible among semiconductor stocks, as reflected by the 1.7 percent drop by the Philadelphia Semiconductor Index.

Transportation stocks also saw considerable weakness on the day, with the Dow Jones Transportation Average falling by 1.6 percent.

Healthcare, retail and pharmaceutical stocks also moved notably lower, while gold stocks bucked the downtrend amid a modest increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are surging $3.95 to $83.44 a barrel after slumping $1.74 to $79.49 a barrel last Friday. Meanwhile, after inching up $3.40 to $1,672 an ounce in the previous session, gold futures are rising $5.60 to $1,677.60 an ounce.

On the currency front, the U.S. dollar is trading at 144.90 yen versus the 144.74 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $0.9764 compared to last Friday's $0.9802.

Asia

Asian stocks retreated on Monday as inflation and interest-rate worries lingered, and oil prices spiked on speculation over OPEC+ cutting production substantially this week.

Oil prices jumped more than 3 percent ahead of the Oct. 5 OPEC+ meeting, while the dollar/yen rate held steady below the 145-level following an intervention by Japan to shore up the fragile currency.

Trading volumes were thin as Chinese markets kicked off the Golden Week holiday. South Korean markets were also shut.

Hong Kong's Hang Seng Index ended 0.8 percent lower at 17,0879.51, after having hit a low of 16,096.96 earlier in the day on fears of tightening U.S. monetary policy.

Japanese stocks bucked the weak trend, with chip-related firms and energy companies leading the surge. Sentiment was buoyed by the Bank of Japan's "tankan" survey results showing that corporate capital expenditure plans for the current fiscal year remains strong.

The Nikkei 225 Index jumped 1.1 percent to 26,215.79, while the broader Topix closed 0.6 percent higher at 1,847.58, reversing initial losses.

Japan Petroleum gained 2.9 percent and Inpex Corp added 3 percent as oil prices rallied amid talk of OPEC+ production cuts. In the tech sector, Screen Holdings, Tokyo Electron and Advantest surged 4-5 percent.

Mimasu Semiconductor Industry soared 12.5 percent after a strong forecast for earnings this fiscal year.

Australian markets ended slightly lower ahead of a widely expected interest rate hike by the Reserve Bank on Tuesday, with economists expecting the central bank to raise rates by 50 basis points to 2.85 percent -- a level not seen since April 2013 to stem inflation, which is trending at 20-year highs.

The benchmark S&P/ASX 200 Index dropped 0.3 percent to 6,456.90, while the broader All Ordinaries Index slipped 0.3 percent to close at 6,656.40. Tech stocks led losses, with WiseTech Global, Appen and Zip Co. falling 1-4 percent.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index fell 1.0 percent to 10,959.45.

Europe

European stocks have declined on Monday, as bond yields rise as last week's red-hot inflation data stoked expectations of aggressive interest rate hikes by the European Central Bank.

Growth worries returned to the fore after a survey showed manufacturing activity across the eurozone declined further last month as a result of rising inflationary pressures and concerns about the economic outlook.

S&P Global's final manufacturing Purchasing Managers' Index (PMI) fell to a 27-month low of 48.4 in September from August's 49.6. That was also a tad below the preliminary reading of 48.5.

While the U.K.'s FTSE 100 Index has fallen by 0.5 percent, the French CAC 40 Index and the German DAX Index are both down by 0.2 percent.

The British pound has edged higher after the British government reversed plans to cut the highest rate of income tax that helped to spark a rebellion in her party and turmoil in financial markets.

Swiss bank Credit Suisse Group, which is facing growing scrutiny over its financial position, has slumped.

Santhera Pharmaceuticals Holding AG is moving higher. The drug maker has submitted a marketing authorization application to the European Medicines Agency (EMA) for vamorolone for the treatment of Duchenne muscular dystrophy.

Prosus N.V., a Dutch consumer internet group, has fallen after announcing that its agreement to acquire Indian digital payments provider BillDesk has been terminated automatically.

RWE AG, a German energy firm, has risen after it agreed to buy Con Edison's Clean Energy Businesses for an enterprise value of $6.8 billion.

U.S. Economic Reports

Atlanta Federal Reserve President Raphael Bostic is due to give welcome and opening remarks at the 2022 Technology-Enabled Disruption conference at 9:05 am ET.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of September.

The ISM's manufacturing PMI is expected to edge down to 52.2 in September from 52.8 in August, although a reading above 50 would still indicate growth.

The Commerce Department is also due to release its report on construction spending in the month of August at 10 am ET. Construction spending is expected to dip by 0.3 percent.

At 11:45 pm ET, Richmond Federal Reserve President Thomas Barkin is scheduled to speak at the Technology-Enabled Disruption conference.

Kansas City Federal Reserve President Esther George is scheduled to speak on Payments before the Federal Reserve Bank of Chicago Payments Symposium at 2:15 pm ET.

At 6:45 pm ET, Atlanta Fed President Bostic is due to moderate a discussion before the Technology-Enabled Disruption conference.

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