The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to see further upside following the rally seen to close out the previous week.
Stocks may continue to benefit from the upward momentum seen over the two previous sessions, which partly reflected renewed optimism about the outlook for interest rates.
Relatively dovish comments from Federal Reserve Chair Jerome Powell combined with weaker-than-expected job growth in April have largely eliminated short-lived concerns the Fed might actually consider raising rates.
Investors have instead grown increasingly confident about a rate cut in the coming months, with the chances rates will be lower by September now at 91.2 percent, according to CME Group's FedWatch Tool.
Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data is likely to keep some traders on the sidelines.
The economic calendar remains relatively quiet throughout the week, although a preliminary reading on consumer sentiment in May might attract some attention along with remarks by several Fed officials.
Following the rally seen over the course of Thursday's session, stocks showed another strong move to the upside during trading on Friday. The major averages all moved sharply higher, with the tech-heavy Nasdaq leading the charge.
The major averages moved roughly sideways after an early surge, remaining firmly positive. The Dow jumped 450.02 points or 1.2 percent to 38,675.68, the Nasdaq spiked 315.37 points or 2.0 percent to 16,156.33 and the S&P 500 shot up 63.59 points or 1.3 percent to 5,127.79.
For the week, the S&P 500 climbed by 0.6 percent, while the Dow advanced by 1.1 percent and the Nasdaq jumped by 1.4 percent.
The extended rally on Wall Street came following the release of a closely watched Labor Department showing employment in the U.S. increased by much less than expected in the month of April.
The Labor Department said non-farm payroll employment climbed by 175,000 jobs in April after surging by an upwardly revised 315,000 jobs in March.
Economists had expected employment to jump by 243,000 jobs compared to the spike of 303,000 jobs originally reported for the previous month.
The report also showed the unemployment rate crept up to 3.9 percent in April from 3.8 percent in March. The unemployment rate was expected to remain unchanged.
The annual rate of wage growth slowed to 4.0 percent in April from 4.1 percent in March, while economists had expected the pace of wage growth to dip to 4.0 percent.
The data helped generate optimism about the outlook for interest rates following the Federal Reserve's monetary policy meeting earlier in the week.
"In an environment where the market is worried about inflation, a softer jobs report with (slightly) higher unemployment, lower-than-expected wage growth and job creation shows that inflation pressure from wages is easing," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
He added, "Chair Powell already signaled to the market that rate hikes are off the table in almost any scenario (although rapidly rising inflation would be met with rate hikes), so the market is back to risk on mode as long as the Fed maintains an easing bias."
Positive sentiment was also generated in reaction to earnings news from Apple (AAPL), with the tech giant surging by 6.0 percent.
Apple rallied after reporting better than expected fiscal second quarter results and announcing a $110 billion stock repurchase.
Meanwhile, a separate report released by the Institute for Supply Management showed U.S. service sector activity unexpectedly contracted in the month of April.
The ISM said its services PMI dipped to 49.4 in April from 51.4 in March, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 52.0.
With the unexpected decrease, the services PMI indicated activity in the sector contracted for the first time since December 2022.
Semiconductor stocks turned in some of the market's best performances on the day, driving the Philadelphia Semiconductor Index up by 2.4 percent.
Software and computer hardware stocks also saw significant strength, contributing to the surge by the tech-heavy Nasdaq.
Considerable strength was also visible among housing stocks, as reflected by the 1.5 percent gain posted by the Philadelphia Housing Sector Index.
Steel, brokerage and retail stocks also showed strong moves to the upside, moving higher along with most of the other major sectors.
Commodity, Currency Markets
Crude oil futures are climbing $0.67 to $78.78 a barrel after sliding $0.84 to $78.11 a barrel last Friday. Meanwhile, after edging down $1 to $2,308.60 an ounce in the previous session, gold futures are rising $16.70 to $2,325.30 an ounce.
On the currency front, the U.S. dollar is trading at 153.53 yen versus the 153.05 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0784 compared to last Friday's $1.0761.
Asia
Asian stocks rose broadly in thin trading on Monday, with Japanese and South Korean markets closed for a public holiday.
The dollar index dropped as Friday's data showing weak U.S. job growth spurred expectations for Fed rate cuts.
Oil prices rose about 1 percent in Asian trading as Saudi Arabia raised the price of its flagship crude to Asia for a third consecutive month.
Gold also traded higher after the Israeli Army told Palestinians to begin evacuating eastern Rafah, signaling that a ground invasion is imminent.
Mainland Chinese markets posted strong gains as a private survey revealed China's services sector witnessed a slight moderation in its expansion pace in April but remained firmly in growth territory.
Sentiment was also boosted after the country's politburo pledged more support for the economy with prudent monetary and proactive fiscal policies.
The benchmark Shanghai Composite Index rallied 1.2 percent to 3,140.72 as trading resumed following the May Day holidays. Hong Kong's Hang Seng Index rose 0.6 percent to 18,578.30.
Australian markets rose notably, with rate-sensitive financials and property developers leading the way higher. Technology and mining stocks also gained ground.
The benchmark S&P ASX 200 Index climbed 0.7 percent to 7,682.40 ahead of the Reserve Bank of Australia's policy meeting on Tuesday. The broader All Ordinaries Index ended 0.7 percent higher at 7,952.30.
Westpac jumped 2.7 percent after the lender increased its buyback program and handed investors a special dividend. Airline Qantas edged up slightly after settling a flight cancellation suit.
Across the Tasman, New Zealand's benchmark S&P/NZX 50 Index slumped 1.0 percent to 11,820.78.
Europe
European stocks have moved to the upside on Monday as weaker-than-expected April U.S. jobs report released on Friday boosted the case for rate cuts by the third quarter.
Closer to home, media reports quoted European Central Bank Chief Economist Philip Lane as saying that inflation is returning to the target in a timely manner and hence there is a stronger case for June rate cut.
He is one of the six members of the Executive Board of the European Central Bank, along with President Christine Lagarde and Vice President Luis de Guindos.
In economic news, the Eurozone's services index was finalized at 53.3 in April, marking a notable improvement from March's 51.5.
The Eurozone Sentix Investor Confidence rose from -5.9 to -3.6 in May, beating expectations for a score of -4.8 and marking the seventh consecutive increase.
While the German DAX Index has jumped by 1.1 percent, the French CAC 40 Index is up by 0.9 percent and the U.K.'s FTSE 100 Index is up by 0.5 percent.
Boliden AB has jumped in Stockholm after the Swedish mining firm announced that it has reached an agreement between worker´s unions and local management to reopen the mine at Tara on a more financially sustainable basis.
Spanish defense and technology firm Indra has also moved sharply higher after its first-quarter net profit rose 40 percent.
On the other hand, Dutch postal firm PostNL NV has come under pressure after reporting a wider-than-expected first-quarter loss.
Atos has also tumbled after announcing that it has received four distinct offers to help bail out the French debt-laden IT company.
Eutelsat has also moved to the downside. The satellite operator confirmed that it is analyzing options for its ground station network.
U.S. Economic Reports
Richmond Federal Reserve President Thomas Barkin is scheduled to speak before the Columbia Rotary Club at 12:50 pm ET.
At 1 pm ET, New York Federal Reserve President John Williams is due to participate in a conversation before the Milken Institute 2024 Global Conference.
Stocks In Focus
Media and entertainment giant Paramount Global (PARA) is moving sharply higher in pre-market trading after report from the New York Times said the company decided to formally open negotiations with a bidding group led by Sony Pictures Entertainment and the private equity giant Apollo.
Shares of Tyson Foods (TSN) are also likely to see initial strength after the meat processing company reported fiscal second quarter earnings that exceeded analyst estimates.
Meanwhile, shares of Spirit Airlines (SAVE) are likely to come under pressure after the discount carrier reported a slightly wider than expected first quarter loss and provided disappointing second quarter revenue guidance.
Intimate apparel company Victoria's Secret (VSCO) is also seeing significant pre-market weakness after Morgan Stanley downgraded its rating on the company's stock to Underweight from Equal-Weight.
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