Heading toward the start of today’s session, U.S. stock futures are suggesting a slightly negative open for the major indexes. In overnight trading, markets in Asia were mixed. Meanwhile, the major European indexes are just below the unchanged mark. Elsewhere, oil prices have moved lower, with West Texas Intermediate (WTI) down about 2.2%, to around $70.60 a barrel.
Stocks began the week in the loss column, following two economic reports that fell short of expectations. The Commerce Department announced that orders for manufactured goods were up 0.4% in April, versus consensus expectations of a 0.6% increase. Meanwhile, the Institute for Supply Management (ISM) released its report on the services sector for May. Its index for economic activity came in at 50.3%, marking a fifth straight month of expansion. However, this fell short of the median forecast of 52.3%. (Readings above 50% indicate expansion, while those below 50% show contraction.) Also weighing on the market was word that regulators were considering increasing capital requirements for large banks.
The rest of the week will be relatively light in terms of economic news. Tomorrow we get the April figures for the U.S. trade deficit and consumer credit. These will be followed on Thursday with the latest figures on initial jobless claims and wholesale inventories for April.
With the debt ceiling no longer overhanging the market, traders have shifted their focus back to the Federal Reserve. The central bank’s next two-day meeting wraps up on Wednesday the 14th. The consensus is calling for a greater-than-75% chance that the Fed will leave its target rate unchanged at 5.00% to 5.25%. (In its efforts to bring down decades-high inflation, the lead bank raised its overnight lending rate 10 times between March 17, 2022 and May 3, 2023.) However, with the strength of recent economic reports, the Street no longer appears to be expecting rate cuts later in the year. Indeed, with inflation hovering just below the 5% mark, it leaves open the possibility that rates may yet edge higher in the months ahead.
Summing up Monday’s price action, stocks ended the session on a down note. The Dow Jones Industrials lost 199 points (0.6%), while the broader S&P 500 slipped by eight points (0.2%) and the tech-centered NASDAQ fell 11 points (0.1%).
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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