Market Analysis

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction in early trading.

Traders may be reluctant to make significant moves as they continue to debate whether the markets have hit a bottom following recent weakness.

After ending Thursday’s session little changed, stocks moved sharply higher during trading on Friday. With the strong upward move on the day, the major averages partly offset the sell-off seen over the past several sessions.

The major averages threatened an afternoon pullback but managed to hold on to strong gains. The Dow jumped 466.36 points or 1.5 percent to 32,196.66, the Nasdaq spiked 434.04 points or 3.8 percent to 11,805.00 and the S&P 500 surged 93.81 points or 2.4 percent to 4,023.89.

Despite the rebound on the day, the major averages still posted steep losses for the week. The Nasdaq plummeted by 2.8 percent, the S&P 500 plunged by 2.4 percent and the Dow tumbled by 2.1 percent.

The rally on Wall Street came as traders once again looked to go bargain hunting following the sharp decline shown by the markets over the past month.

The Dow and the S&P 500 ended Thursday's trading well off their lows of the session but still finished the day at their lowest closing levels in over a year.

The S&P 500 also ended the session down by 18 percent compared to its record closing high in early January, just shy of the 20 percent plunge widely used as the technical definition of a bear market.

While recent bargain hunting efforts have largely been thwarted by worries about the Federal Reserve aggressively raising interest rates in an effort to combat elevated inflation, traders seemed to shrugging off those concerns.

The markets have also shrugged off a report from the University of Michigan showing consumer sentiment has deteriorated by much more than expected in the month of May.

The report showed the consumer sentiment index tumbled to 59.1 in May from 65.2 in April. Economists had expected the index to edge down to 64.0.

With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 55.8 in August of 2011.

A separate report released by the Labor Department showed imports prices were unexpectedly unchanged in the month of April.

The Labor Department said import prices came in flat in April after surging by an upwardly revised 2.9 percent in March.

Economists had expected import prices to climb by 0.6 percent compared to the 2.6 percent jump originally reported for the previous month.

The report also showed the annual rate of growth in imports prices slowed to 12.0 percent in April from an upwardly revised 13.0 percent in March.

Semiconductor stocks showed a substantial move to the upside on the day, extending the modest rebound seen over the course of the previous session.

The Philadelphia Semiconductor Index soared by 5.1 percent after hitting its lowest intraday level in over a year during trading on Thursday.

Significant strength was also visible among airline stocks, as reflected by the 5 percent spike by the NYSE Arca Airline Index. The index bounced off a two-month closing low.

Oil service stocks also turned in a strong performance on the day, moving sharply higher along with the price of crude oil.

With crude for June delivery surging $4.36 to $110.49 a barrel, the Philadelphia Oil Service Index jumped by 4.6 percent.

Networking, brokerage, computer hardware and retail stocks also saw considerable strength on the day, moving notably higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are sliding $0.71 to $109.78 a barrel after spiking $4.36 to $110.49 a barrel last Friday. Meanwhile, after falling $16.40 to $1,808.20 an ounce in the previous session, gold futures are slipping $3.50 to $1,804.60 an ounce.

On the currency front, the U.S. dollar is trading at 129.17 yen versus the 129.22 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0432 compared to last Friday’s $1.0412.

Asia

Asian stocks gave up some early gains to end on a mixed note Monday after the latest data out of China showed the gloomy impact of the country's "zero-COVID" policy.

China's long-term economic fundamentals remain sound and the continued momentum of economic recovery has not changed, a senior official from the National Bureau of Statistics (NBS) has said.

China's Shanghai Composite Index slipped 0.3 percent to 3,073.75 after retail sales and industrial production data for April came in far worse than analysts had expected, underlining the deep damage lockdowns were doing to the world's second-largest economy.

April retail sales plunged an annual 11.1 percent, almost twice the drop forecast, while industrial output dropped 2.9 percent contrary to expectations for a slight increase.

Hong Kong's Hang Seng Index finished 0.3 percent higher at 19,950.21 after China's central bank refrained from cutting rates but lowered the mortgage rate for first home buyers. Sentiment was also helped by reports suggesting that Shanghai was relaxing some of its lockdown restrictions.

Japan's Nikkei 225 Index rose 0.5 percent to 26,547.05 as a weak yen offered some support to exporters. The index ended off the day's highs as investors pondered the risks from China's slowdown and longer tightening cycles.

Precision parts maker NTN Corp topped the gainers list to climb as much as 11.7 percent while nonferrous metals manufacturer Dowa Holdings fell more than 13 percent.

In economic news, producer prices surged an annual 10.0 percent in April, the Bank of Japan said earlier today - topping forecasts for 9.4 percent and up from the upwardly revised 9.7 percent increase in the previous month.

Seoul stocks reversed course to end slightly lower as U.S. equity futures declined ahead of a big earnings week for retailers. BOK Governor's comments on the magnitude of interest rate increases also weighed on sentiment. The Kospi dropped 0.3 percent to 2,596.58.

National flag carrier Korean Air Lines, top carmaker Hyundai Motor and chipmaker SK Hynix gave up 1-2 percent.

Australian markets eked out modest gains as banks rose on expectations that they will benefit from higher interest rates. The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,093. The big four banks gained between 0.6 percent and 1.6 percent.

Brambles soared 11.2 percent after the logistics services firm confirmed it is in discussions with European private-equity giant CVC Capital about a potential takeover offer.

Europe

European stocks were broadly lower on Monday after the latest data out of China showed the gloomy impact of the country's "zero-COVID" policy.

Closer home, the European Commission cut its growth forecast for the 19 countries sharing the euro to 2.7 percent this year from 4.0 percent predicted in February, citing the impact of the Ukraine war and soaring inflation.

GDP growth is expected to slow to 2.3 percent next year, below the 2.7 percent seen before.

Data showed earlier in the day that German wholesale price inflation advanced to 23.8 percent in April from 22.6 percent in March. This was the biggest rate since records began in 1962.

Euro zone bond yields were up after ECB policymaker Pablo Hernández de Cos said the European Central Bank will likely decide at its next meeting to end its stimulus program in July, and raise interest rates "very soon" after that.

Separately, ECB policymaker Francois Villeroy de Galhau said a weak euro threatened price stability in the currency bloc.

The pan European Stoxx 600 slipped 0.1 percent to 432.87 after climbing 2.1 percent on Friday.

The German DAX and France's CAC 40 index both dipped around 0.4 percent while the U.K.'s FTSE 100 was up 0.1 percent.

Irish airline Ryanair fell over 3 percent after it posted a 355 million-euro ($369.06 million) net loss for the 12 months ended March.

Italian water pump company Interpump Group jumped 6.3 percent after unveiling its first-quarter results.

British power companies Drax and Centrica jumped 3-4 percent after regulator Ofgem proposed more frequent changes to the energy price cap.

Technical products company Diploma slumped 5.2 percent despite the company posting a rise in first-half pretax profit and revenue.

Vodafone Plc shares rallied 2.8 percent after United Arab Emirates-based telecoms company PJSC bought a 9.8 percent stake in the company for $4.4 billion.

Unilever declined 1.7 percent on concerns that its margins will face pressure due to inflation.

Experian Group shares fell 1.7 percent after the consumer-credit reporting agency agreed to acquire a 51 percent stake in Brazilian fintech company MOVA Sociedade de Empréstimo entre Pessoas S.A. for a cash consideration of 40 million Brazilian reais ($7.9 million).

French drug major Sanofi was down about 1 percent. The company has been ordered to compensate a family whose child suffered from a form of autism caused by its epilepsy drug Valproate.

Ophthalmology company Nicox SA gained about 1 percent after it announced a new governance structure.

Retail group Casino soared 5.5 percent on news it plans to sell its renewable energy unit.

U.S. Economic Reports

New York manufacturing activity unexpectedly contracted in the month of May, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index plunged to a negative 11.6 in May from a positive 24.6 in April. A negative reading indicates a contraction in regional manufacturing activity.

Economists had expected the index to slump to a positive 15.5, which would have still indicated growth in the sector.

Looking ahead, the New York Fed noted firms expressed less optimism about the six-month outlook than they did earlier this year.