Dipo Olowookere
By Investors Hub
The major US index futures are pointing to a higher opening on Monday, with stocks poised to extend the upward trend seen in recent sessions.
The markets may continue to benefit from recent upward momentum, which has propelled the major averages to record highs.
Trading activity may be somewhat subdued, however, with traders reluctant to make significant moves ahead of the key earnings news later this week.
Traders are also digesting remarks by Federal Reserve Chair Janet Yellen, who spoke at the Group of 30 International Banking Seminar on Sunday.
Despite subdued inflation, Yellen reiterated her belief additional gradual interest rate hikes are likely to be appropriate over the next few years.
“My best guess is that these soft readings will not persist, and with the ongoing strengthening of labor markets, I expect inflation to move higher next year,” Yellen said.
Stocks moved modestly higher during trading on Friday, offsetting the pullback seen last Thursday. With the upward move on the day, the Dow and the Nasdaq climbed to new record closing highs.
The major averages ended the day in positive territory but off their best levels. The Dow crept up 30.71 points or 0.1 percent to 22,871.72, the Nasdaq rose 14.29 points or 0.2 percent to 6,605.80 and the S&P 500 inched up 2.24 points or 0.1 percent to 2,553.17.
For the week, the Dow climbed by 0.4 percent, while the Nasdaq and the S&P 500 both edged up by 0.2 percent.
The modest strength on Wall Street came following the release of some upbeat economic data, including a Commerce Department report showing a substantial increase in retail sales in the month of September.
The Commerce Department said retail sales surged up by 1.6 percent in September after edging down by a revised 0.1 percent in August.
Higher gas prices contributed to the jump in retail sales, as sales by gasoline stations soared by 5.8 percent during the month.
Closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, rose by 0.4 percent.
The University of Michigan also released a report showing an unexpected improvement in consumer sentiment in the month of October.
The report said the consumer sentiment index jumped to 101.1 in October after dipping to 95.1 in September. Economists had expected the index to edge down to 95.0.
With the unexpected increase, the consumer sentiment index surged up to its highest level reaching 103.8 in January of 2004.
A separate report from the Labor Department showed consumer prices increased by slightly less than expected in the month of September.
The Labor Department said its consumer price index climbed by 0.5 percent in September after rising by 0.4 percent in August. Economists had expected prices to increase by 0.6 percent.
Excluding food and energy prices, core consumer prices inched up by 0.1 percent in September after edging up by 0.2 percent in August. Core prices had been expected to rise by another 0.2 percent.
Traders were also digesting the latest earnings news, including results from financial giants Bank of America (BAC) and Wells Fargo (WFC).
While Bank of America reported third quarter results that beat analyst estimates on both the top and bottom lines, Wells Fargo reported third quarter revenues that came in below expectations.
Steel stocks showed a significant move to the upside on the day, as upbeat Chinese trade data has generated optimism about the outlook for demand.
Reflecting the strength in the steel sector, the NYSE Arca Steel Index surged up by 3.7 percent to its best closing level in over seven months.
Considerable strength was also visible among computer hardware stocks, as reflected by the 1.5 percent advance by the NYSE Arca Computer Hardware Index. The index reached its best closing level in two months.
HP Inc. (HPQ) led the hardware sector higher after the computer and printer maker provided upbeat full-year earnings guidance and announced a 5 percent increase in its dividend.
Oil service and semiconductor stocks also saw some strength on the day, while weakness among utilities and transportation stocks limited the upside for the markets.
