Bargain Hunting May Lead To Early Strength On Wall Street - U.S. Commentary

(RTTNews) - After showing a substantial move to the downside last week, stocks are likely to regain some ground in early trading on Monday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 46 points.

Bargain hunting is likely to contribute to some early strength on Wall Street following last week's sell-off, which reflected global growth worries and concerns about monetary policy divergence.

Traders may look to pick up stocks at reduced levels, as the Nasdaq and the S&P 500 ended last Friday's trading at their worst closing level in over four months. The Dow also set a new two-month closing low

While the S&P 500 has fallen by more than 5 percent from its mid-September high, John Higgins, Chief Markets Economist at Capital Economics, said the pullback is unlikely to mark the beginning of a bear market.

"This is because bear markets typically only occur in, and around, recessions, rather than in the middle of entrenched recoveries," Higgins said.

He added, "We are sticking with our long-held forecast that the index will end this year around 1,950 (compared to 1,906 now) and grind slowly higher to 2,100 by the end of 2016."

Nonetheless, trading activity on Monday may be somewhat subdued due to the Columbus Day holiday and the lack of major U.S. economic data.

The economic calendar is set to pick up later in the week, however, with traders likely to keep an eye on reports on retail sales, producer prices, industrial production, and housing starts.

Earnings season will also pick up steam in the coming days, with Citigroup (C), JP Morgan (JPM), Wells Fargo (WFC), Intel (INTC), American Express (AXP) Google (GOOG), General Electric (GE) and Morgan Stanley (MS) among the companies due to report their quarterly results.

Among individual stocks, shares of J.C. Penney (JCP) are moving sharply higher in pre-market trading after the department store operator announced the appointment of Marvin Ellison, currently executive vice president of stores at Home Depot (HD), as President and CEO-Designee.

Mobile operator T-Mobile (TMUS) could also see early strength after Macquarie upgraded its rating on the company's stock to Outperform from Neutral.

On the other hand, shares of Shutterfly (SFLY) may come under pressure after Bloomberg reported that Silver Lake Management has shelved an attempt to acquire the photo-sharing site.

Stocks moved notably lower over the course of the trading day on Friday, extending the steep drop that was seen on Thursday.

The major averages all ended the day firmly in the red, although the tech-heavy Nasdaq underperformed its counterparts by a wide margin.

While the Nasdaq plunged 102.10 points or 2.3 percent to 4,276.24, the Dow fell 115.15 points or 0.7 percent to 16,544.10 and the S&P 500 slid 22.08 points or 1.2 percent to 1,906.13.

For the week, the Nasdaq plummeted by 4.5 percent, while the Dow and the S&P 500 tumbled by 2.7 percent and 3.1 percent, respectively.