U.S. stock futures pointed to a broadly flat opening on Monday, with investors showing little appetite for major positions following last week’s strong rally and ahead of closely watched inflation figures due in the coming days.
With little scheduled on the domestic economic calendar on Monday, traders are likely to assess the recent advance on Wall Street after the S&P 500 finished Friday at a fresh record closing high.
Attention is now shifting towards upcoming U.S. inflation readings, which could influence expectations for the Federal Reserve’s next interest-rate decision following signs of weakening in the labour market.
“Consensus forecasts point to a modest easing in both headline and core CPI, which, if realized, would reinforce the view that the Fed can afford to remain patient,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “That would likely keep downward pressure on Treasury yields and provide further support for risk assets.”
Nasdaq leads strong finish on Wall Street
U.S. equities advanced throughout Friday’s session, with all three major indices finishing higher and the S&P 500 establishing another record close.
The technology-heavy Nasdaq gained 342.26 points, or 1.3 percent, to finish at 26,690.62.
The S&P 500 advanced 47.68 points, or 0.6 percent, to 7,757.64, while the Dow Jones Industrial Average added 151.83 points, or 0.3 percent, to close at 54,036.93.
The gains capped a particularly strong week for U.S. equities. The Nasdaq surged 5.2 percent over the five sessions, while the S&P 500 climbed 3.6 percent and the Dow advanced 3 percent.
Weak jobs report changes interest-rate expectations
Much of Friday’s positive sentiment followed a Labor Department report showing that U.S. employment unexpectedly contracted in July.
Non-farm payrolls declined by 23,000 jobs during the month, following a downwardly revised increase of just 20,000 in June.
Economists had anticipated an increase of 88,000 jobs, compared with the previously reported June gain of 57,000.
While the figures raised fresh concerns about the health of the U.S. labour market, investors also interpreted the weakness as reducing the likelihood of another Federal Reserve interest-rate increase next month.
The unemployment rate provided a somewhat more encouraging signal, slipping to 4.1 percent in July from 4.2 percent in June. Economists had expected the rate to remain unchanged.
Gold and technology stocks lead sector gains
The shift in interest-rate expectations contributed to broad strength across several areas of the market.
Gold mining shares were among Friday’s strongest performers as bullion prices advanced, pushing the NYSE Arca Gold Bugs Index 7.4 percent higher to its strongest closing level in more than two months.
Computer hardware stocks also recorded substantial gains, with the NYSE Arca Computer Hardware Index jumping 4.4 percent.
Biotechnology shares participated in the rally, sending the NYSE Arca Biotechnology Index 3.2 percent higher.
Semiconductor, housing and software stocks also recorded notable advances alongside gains across most other major sectors.
After last week’s powerful rally, however, investors appear more cautious heading into Monday’s session. With inflation figures potentially shaping expectations for the next Federal Reserve decision, Wall Street could remain relatively directionless until traders receive greater clarity on the outlook for prices and monetary policy.