RTTNews - The dull mood on Wall Street is likely to continue, as reflected by the sagging U.S. futures. Although economists vouch by a strong recovery in the second half of the year, what happens subsequently has become the moot point. Some see a double-dip recession, which could make an eventual recovery all the more difficult, while others see an extended period of anemic growth. Both scenarios doesn't bode well for the economy, which explains the anxiety surrounding the recovery.
As of 6:30 AM, the Dow futures are down 60 points, the S&P 500 futures are down 6 points and the Nasdaq Composite futures are moving down by over 12 points.
After a strong comeback in the week ended August 21st, the major U.S. averages were cruising along in the past week, although trading reflecting cautious optimism. However, by the end of the week, optimism gave way to fears and uncertainty and consequently, the major averages squandered most of their gains and ended modestly higher. The lackluster performance came despite the release of fairly positive economic reports.
Friday saw the Dow Industrials snapping its eight-session winning run and closing down 0.4%, while the S&P 500 Index and the Nasdaq Composite slid 0.2% and 0.1%, respectively. However, for the week, the Dow Industrials was up 0.40% and the Nasdaq Composite Index was up 0.39%, while the S&P 500 Index recorded a weekly gain of 0.27%.
The unfolding week assumes significance because of the fact that traders get to digest some first-tier economic reports along with some lesser important reports. The August non-farm employment report, the Institute for Supply Management's manufacturing as well as services reports and the minutes of the August meeting of the Federal Reserve Open Market Committee are likely to be in the spotlight.
Economists expect payrolls to decline by as much as they had in July and the employment rate to tick down slightly, as they don't expect a quick fix for the ravaged job market. The employment market is expected to show a decline of 225,000 jobs in August. At the same time, the manufacturing sector that has been showing a gradual recovery from a deep contraction may show a move into the expansion zone in July. Toeing in line with the regional surveys, the manufacturing index based on the ISM's national survey is expected to show a 50+ reading after several months of sub-50 readings.
Apart from expressing apprehensions over the reports to be released over the course of the week, traders may also focus on the results of the ISM-Chicago's manufacturing survey. Economists expect the business barometer index to rise to 47.2 in June from 43.4 in the previous month.
A few stocks that could see activity in the session include Airgas (ARG), Kirby Corp. (KEX), Exponent, Inc. (EXPO) and Encore Wire Corp. (WIRE), which have been included in the S&P indexes.
Meanwhile, Watson Pharma (WPI) said it has received approval from the FDA for its ANDA for Levonorgestrel 0.75 mg tablet for over-the-counter use in women aged 17 and above and for prescription use in women under the age of 17. The company said it would market the product meant for preventing pregnancy under the trade name 'Next Choice' and would launch the product shortly.
Led lower by the Chinese market, which has been witnessing significant volatility in recent sessions, the Asian markets fell sharply on Monday. The weakness was tempered in the Japanese market by the electoral victory of the opposition Democratic Party of Japan, which is seen as an opportunity for implementing reforms and reviving the domestic economy.
Additionally, a bigger-than-expected increase in Japanese industrial production for July and a slower than expected drop in retail sales helped limit the losses. The Japanese Nikkei 225 average, which earlier traded at an 11-month high of 10,767, retreated sharply and closed down 0.40%. The Chinese market fell 6.74%, while the Hang Seng Index, the Kospi and the Sensex all ended down over 1%.
European stocks opened lower, although the losses were less serve than their Asian counterparts, and are currently seen languishing in negative territory. The U.K. market is closed for a national holiday. Among the other major averages, the French CAC 40 Index and the German DAX Index are receding around 0.75% each.
With the equities receding, commodities, which are also perceived as risky bets, are pulling back along with them and are moving to the downside.
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