Futures Pointing to Roughly Flat Open on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a roughly flat opening on Monday, with stocks likely to show a lack of direction after ending last Friday?s trading mostly higher.

Traders may be reluctant to make any significant moves amid a lack of major U.S. economic news following the slew of data and events last week.

The economic calendar remains relatively light throughout the week, although traders are likely to keep an eye on reports on producer and consumer price inflation.

On the earnings front, Disney (DIS), Tyson Foods (TSN), Tenet Healthcare (THC), Office Depot (ODP), CVS Health (CVS), and 21st Century Fox (FOXA) are among the companies due to report their quarterly results this week.

Stocks moved mostly higher over the course of the trading session on Friday, as traders digested to the Labor Department’s closely watched monthly jobs report. The tech-heavy Nasdaq fluctuated as the day progressed but managed to close in positive territory.

The major averages all closed higher, although the Nasdaq underperformed its counterparts after Thursday’s rally. While the Nasdaq inched up 9.33 points or 0.1 percent to 7,812.01, the Dow climbed 136.42 points or 0.5 percent at 25,462.58 and the S&P 500 rose 13.13 points or 0.5 percent to 2,840.35.

For the week, the Dow crept slightly higher, while the S&P 500 advanced by 0.8 percent and the Nasdaq jumped by 1 percent.

Before the start of trading, the Labor Department released a report showing weaker than expected job growth in the month of July due in part to a drop in government employment and the closing of Toys “R” Us stores.

The report said non-farm payroll employment climbed by 157,000 jobs in July compared to economist estimates for a jump of about 190,000 jobs.

However, the report also showed upward revisions to the increases in employment in May and June, which surged up by 268,000 jobs and 248,000 jobs, respectively.

With the upward revisions, employment gains in May and June combined were 59,000 more than previously reported.

The report also showed a modest decrease in the unemployment rate, which edged down to 3.9 percent in July from 4.0 percent in June. The drop matched economist estimates.

Meanwhile, the Labor Department said the annual rate of average hourly employee earnings growth was unchanged from the previous month at 2.7 percent.

Gregory Daco, Chief U.S. Economist at Oxford Economics, said gradually firming wages, steady labor force participation, and falling unemployment is expected to persist into the second half of the year.

“We expect around 180,000 jobs per month to be added through the rest of 2018,” Daco said. “In this context, we continue to foresee four Fed rate hikes in 2018, unless trade policy foils these plans.”

A separate report from the Commerce Department showed the U.S. trade deficit widened in the month of June amid an increase in imports and a decrease in exports.

The report said the trade deficit widened to $46.3 billion in June from a revised $43.2 billion in May. The deficit had been expected to widen to $46.5 billion from the $43.1 billion originally reported for the previous month.

The Institute for Supply Management also released a report showing growth in U.S. service sector activity slowed by much more than anticipated in the month of July.

The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June. A reading above 50 still indicates service sector growth, although economists had expected a much more modest drop to 58.6.

Despite the notable advance by the broader markets, many of the major sectors ended the day showing only modest moves.

Steel stocks saw considerable strength, however, with traders going bargain hunting following yesterday’s sell-off. Reflecting the strength in the sector, the NYSE Arca Steel Index climbed by 1.1 percent.

Utilities, retail, and chemical stocks also move to the upside on the day, while significant weakness was visible among biotechnology stocks.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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