Choppy Trading May Persist Ahead of G20 Meeting

March 20, 2017
wall street

Choppy Trading May Persist Ahead of G20 Meeting

By Modupe Gbadeyanka

The major U.S. index futures are pointing to a modestly lower opening on Monday following the lackluster performance seen last Friday.

Disappointment with the outcome of the G20 meeting may weigh on the markets, as finance ministers failed to agree on a commitment to keep global trade free and open.

The token reference to trade in the G20 communiqué was seen as a reflection of President Donald Trump’s more protectionist policies.

Any early selling pressure is likely to be relatively subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines.

The economic calendar remains relatively light throughout the week, although traders are likely to keep an eye on reports on new and existing home sales and durable goods orders.

Speeches by a number of Federal Reserve officials may also attract attention this week after the central bank’s decision to raise interest rates by a quarter point last week.

With traders seemingly reluctant to make any significant moves, stocks showed a lack of direction over the course of the trading session on Friday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day roughly flat. While the Nasdaq inched up 0.24 points or less than a tenth of a percent to 5,901.00, the Dow slipped 19.93 points or 0.1 percent to 20,914.62 and the S&P 500 dipped 3.13 points or 0.1 percent to 2,378.25.

For the week, the Nasdaq advanced by 0.7 percent, while the Dow and the S&P 500 edged up by 0.1 percent and 0.2 percent, respectively.

The choppy trading on Wall Street came as traders continued to digest Wednesday’s closely watched monetary announcement from the Federal Reserve.

The Fed announced a widely anticipated quarter point increase in interest rates and projected two additional rate hikes this year.

A meeting of G20 finance ministers and central bank governors being held in Germany over the next two days also kept some traders on the sidelines.

Given the protectionist views of the Trump administration, it remains to be seen whether the final statement from the meeting will contain a pledge to resist all forms of protectionism.

Traders largely shrugged off the latest batch of U.S. economic data, including a report from the Fed showing that industrial production was unexpectedly flat in February.

The Fed said industrial production was unchanged in February after edging down by a revised 0.1 percent in January. Economists had expected production to rise by 0.2 percent.

A jump in mining output and a continued increase in manufacturing output were offset by another slump in utilities output amid unseasonably warm weather.

The University of Michigan released a separate report showing a bigger than expected rebound in consumer sentiment in March.

The preliminary report showed that the consumer sentiment index rose to 97.6 in March after dropping to 96.3 in February. Economists had expected the index to rise to 97.0.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster performance by the broader markets.

Brokerage stocks saw notable weakness, however, with the NYSE Arca Broker/Dealer Index sliding by 1.3 percent. The index pulled back after showing a strong move to the upside in the two previous sessions.

Steel, banking, and biotechnology stocks also moved to the downside on the day, while some strength was visible among chemical and utilities stocks.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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