Stocks May Move Back To The Downside In Early Trading - U.S. Commentary

(RTTNews) - On the heels of the rebound seen last week, stocks may move back to the downside during trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 168 points.

The downward momentum for the markets partly reflects renewed concerns about the Chinese economy after a report from the Financial Times said the government has decided to abandon attempts to boost the stock market through large-scale share purchases.

Senior regulatory officials told the Financial Times China's leaders feel they mishandled their efforts to rescue the stock market.

The Chinese government resumed large-scale stock buying late in the trading day last Thursday to help the Shanghai Composite Index close sharply higher, but officials said the government will refrain from further large-scale buying of equities.

Nonetheless, trading activity may be somewhat subdued as traders look ahead to the release of several key economic reports in the coming days.

The monthly jobs report due on Friday may be the highlight of the week, but traders are also likely to keep an eye on reports on manufacturing and service sector activity, construction spending, and international trade as well as the Federal Reserve's Beige Book.

Shortly after the open, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of August.

Economists expect the Chicago business barometer to inch up to 54.9 in August from 54.7 in July, with a reading above 50 indicating growth.

Following several sessions of volatility, stocks turned in a lackluster performance during trading last Friday. The major averages spent much of the day bouncing back and forth across the unchanged line before closing roughly flat.

The major averages ended the day on opposite sides of the unchanged line. While the Dow edged down 11.76 points or 0.1 percent to 16,643.01, the Nasdaq rose 15.62 points or 0.3 percent to 4,828.32 and the S&P 500 inched up 1.21 points or 0.1 percent to 1,988.87.

For the week, the major averages all moved higher due to the recovery rally on Wednesday and Thursday. The Nasdaq surged up by 2.6 percent, while the Dow and the S&P 500 advanced by 1.1 percent and 0.9 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while China's Shanghai Composite Index fell by 0.8 percent.

The major European markets are also seeing some weakness on the day. The French CAC 40 Index is down by 0.7 percent, while the German DAX Index is down by 0.8 percent. The markets in the U.K. are closed for a holiday.

In commodities trading, crude oil futures are sliding $1.19 to $44.03 a barrel after jumping $4.77 or 11.8 percent to $45.22 a barrel in the week ended August 28th. Gold futures, which fell $25.60 or 2.2 percent to $1,134 an ounce last week, are falling $6.40 to $1,127.60 an ounce.

Among currencies, the dollar ended mixed in the previous week, with the yen rising 0.3 percent against the greenback before ending the week at 121.71 yen but the dollar rallying 1.2 percent against the euro to $1.1185. The dollar is currently trading at 121.28 yen and is valued at $1.1224 versus the euro.