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U.S. Stocks May Add To Last Week’s Strong Gains In Early Trading

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May 20 2024 9:10AM

The major U.S. index futures are currently pointing to a modestly higher open on Monday, with stocks poised to add to the strong gains posted last week.

The markets may continue to benefit from recent upward momentum, which lifted the major averages to new record highs last week.

The Dow closed above 40,000 for the first time last Friday amid renewed optimism about the outlook for interest rates.

While the Federal Reserve is widely expected to leave interest rates unchanged next, CME Group’s FedWatch Tool is currently indicating a 74.3 percent chance rates will be a quarter point lower by September.

Overall trading activity is likely to be somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

The economic calendar remains relatively quiet throughout the week, although reports on durable goods orders and new and existing home sales may attract some attention along with the minutes of the latest Fed meeting.

Traders may also be reluctant to make significant moves ahead of the release of quarterly results from AI darling Nvidia (NASDAQ:NVDA) after the close of trading on Wednesday.

Following the modest pullback seen over the course of Thursday’s session, stocks showed a lack of direction during trading on Friday. The major average spent the day bouncing back and forth across the unchanged line before eventually closing narrowly mixed.

Despite the choppy trading, the Dow closed above 40,000 for the first time, rising 134.21 points or 0.3 percent to 40,003.59.

The S&P 500 also crept up 6.17 points or 0.1 percent to 5,303.27, while the tech-heavy Nasdaq edged down 12.35 points or 0.1 percent at 16,685.97.

For the week, the Nasdaq surged by 2.1 percent, while the S&P 500 jumped by 1.5 percent and the Dow shot up by 1.2 percent.

The choppy trading on Wall Street came as traders seemed reluctant to make significant moves as they digest recent strength in the markets, which saw the major averages reach new record highs.

While recent economic data has generated optimism about an interest rate cut in the coming months, comments from Federal Reserve officials have put a damper on some of the cheer.

Following the slew of U.S. data released over the past two days, the economic calendar was relatively quiet today, although the Conference Board released a report showing a continued decrease by its reading on leading U.S. economic indicators in the month of April.

The Conference Board said its leading economic index fell by 0.6 percent in April after dipping by 0.3 percent in March. Economists had expected the index to decrease by another 0.3 percent.

Among individual stocks, shares of Reddit (NYSE:RDDT) moved sharply higher after the social media company announced a partnership with OpenAI.

Online networking company Doximity (NYSE:DOCS) also surged after reporting better than expected fiscal fourth quarter results.

On the other hand, shares of GameStop (NYSE:GME) plunged after the video game retailer forecast a decrease in first quarter sales and revealed plans to sell up to 45 million class A common shares

Most of the major sectors showed only modest moves on the day, contributing to the lackluster performance by the broader markets.

Gold stocks showed a substantial move to the upside, however, with the NYSE Arca Gold Bugs Index surging by 3.7 percent to a two-year closing high. The rally by gold stocks came amid a sharp increase by the price of the precious metal.

Oil producer, brokerage and networking stocks also turned in strong performances, while modest weakness emerged among semiconductor stocks.