Investors May Take A Breather Following Recent Gains

(RTTNews) - The major U.S. index futures are pointing to a roughly flat open on Monday. Uncertainty about the near-term outlook for the markets may lead to choppy trading after last week's gains lifted the Dow and the S&P 500 to record closing highs. While upbeat manufacturing data out of China may generate some positive sentiment, any early buying interest is likely to be offset by worries about the situation in Iraq.

U.S. stocks reversed course and advanced in the week ended June 20th, with the Fed decision providing support to the upward momentum.

Last Monday, the major averages ended a lackluster session slightly higher, as positive regional manufacturing and industrial output data mitigated the weakness triggered by valuation concerns. Notwithstanding the release of weak housing starts data, the major averages managed to stay afloat on Tuesday, ending modestly higher.

With the FOMC statement and Fed Chair Janet Yellen signaling that easy monetary policy would continue, stocks launched into a rally on Wednesday. Overbought levels pressured stocks on Thursday despite the release of positive domestic economic data, resulting in a narrowly mixed close. The major averages ended Friday's session higher, as the markets ran up on the momentum amid quadruple witching, largely ignoring weak earnings from Oracle (ORCL).

For the week ended June 20th, the Dow Industrials ended up 1.02 percent, while the S&P 500 Index and the Nasdaq Composite jumped 1.38 percent and 1.33 percent, respectively.

Among the sector indexes, the NYSE Arca Gold Bugs Index rallied 6.55 percent and the Dow Jones Utility Average gained 4.43 percent. Additionally, the Dow Jones Transportation Average, the NYSE Arca Oil Index, the Philadelphia Oil Service Index and the NYSE Arca Securities Broker/Dealer Index gained over 2 percent each.

Commodity, Currency Markets

Crude oil futures are slipping $0.04 to $106.79 a barrel after edging down $0.08 to $106.83 a barrel in the week ended June 20th.

Last Monday, oil dipped marginally amid a consolidation move around the nine-month high hit the previous week. The commodity retreated moderately on Tuesday and fell further on Wednesday. On Thursday, oil stalled its declines and rose moderately. The commodity extended its gains on Friday yet ended the week modestly lower.

Gold futures, which rallied $42.50 or 3.3 percent to $1,316.60 an ounce last week, are currently slipping $1.10 at $1,315.50 an ounce.

The week ended June 20th saw the dollar weakening on the Fed's promise of continued monetary policy accommodation. The dollar fell 0.44 percent against the euro before ending the week at $1.3600. At the same time, the dollar edged up 0.03 percent against the yen over the week to 102.07 yen.

The U.S. dollar is currently trading at 101.84 yen and is valued at $1.3595 versus the euro.

Asia

The Asian markets closed mixed once again, with better than expected regional manufacturing data mitigating weakness related to profit taking. The Japanese, Australian and South Korean markets advanced, while most other major markets retreated.

The Japanese market benefited from positive Japanese and Chinese manufacturing data that perked up risk appetite. The Nikkei 225 average stayed in positive territory in the morning only to move back and forth across the unchanged line in a narrow range in the afternoon. The index ended up 19.86 points or 0.13 percent at a 5-month high of 15,369. Resource, construction, telecom and retail stocks gained ground, while financial and utility stocks moved to the downside.

Australia's All Ordinaries opened higher and advanced until late morning trading. After moving sideways till early afternoon trading, the index climbed yet again till the mid-session. Subsequently, the index gave back some ground but still closed higher. The index ended up 31.10 points or 0.58 percent at 5,433. The market witnessed broad based strength, with material stocks leading the gains.

Hong Kong's Hang Seng Index ended at 22,805, down 389.25 points or 1.68 percent, and China's Shanghai Composite Index ended a volatile session down 2.31 points or 0.11 percent at 2,024.

On the economic front, the Chinese manufacturing sector expanded for the first time in six months in June, driven by domestic and foreign orders, according to flash estimates released by Markit Economics. The HSBC flash manufacturing purchasing managers' index rose to 50.8 in June, a seven-month high, from 49.4 in May. Economists had expected the index to come in at 49.7. Markit's manufacturing survey for Japan also showed a rebound by manufacturing activity in June.

Europe

European stocks opened little changed but sharply in early trading, as traders digest private sector activity data from the region and react to the geopolitical concerns surrounding Iraq and Ukraine.

In corporate news, Spain's Banco Santander announced a deal to buy GE Money, GE Capital's consumer finance business in Sweden, Norway and Denmark for 700 million euros.

Meanwhile, reports suggest that France's BNP Paribas could pay up to $8 billion to $9 billion to settle with U.S. authorities related to a probe over the bank's alleged violations of U.S. sanctions.

On the economic front, the results of a preliminary survey by Markit showed that private sector activity in the eurozone slowed for a second straight month in June. The composite purchasing managers' index edged down 0.7 points to 52.8 in June. The manufacturing purchasing managers' index eased 0.3 points to 51.9 and the service sector purchasing managers' index slipped 0.4 points to 52.8.

U.S. Economic Reports

Consumer and housing market data are among the noteworthy economic report scheduled to be released during the unfolding week. Traders are likely to focus on the National Association of Realtors' existing home sales report for May, the Commerce Department's new home sales report for May, the results of separate consumer confidence surveys for June by the Conference Board and the University of Michigan, the Commerce Department's durable goods orders and personal income and outlays reports for May and the weekly jobless claims data.

Flash estimate of Markit's June manufacturing and non-manufacturing purchasing managers' indexes for the U.S., the results of a couple of regional manufacturing surveys, the results of house price surveys for April by S&P/Case-Shiller and the Federal House Finance Agency, final U.S. first quarter GDP data and the Treasury Department's auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

Markit is due to release the results of its preliminary manufacturing survey for the U.S. at 9:45 am ET. Economists expect the manufacturing purchasing managers' index to rise to 56.5 in June from 56.2 in May.

The National Association of Realtors is scheduled to release its existing home sales data for May at 10 am ET. The consensus estimate calls for existing home sales to come in at a seasonally adjusted annual rate of 4.75 million units.

Existing home sales came in at a seasonally adjusted annual rate of 4.65 million units in April compared with a 4.59 million-unit rate in March. Both single family home and condos/co-ops sales were higher for the month. Inventories measured in absolute terms rose by 330,000, and months of supply rose to 5.9 months from 5.1 months, marking the highest level since August 2012. First time buyers accounted for just 29 percent of the total sales. The median price of an existing home was up 5.2 percent year-over-year to $201,700.

Stocks in Focus

General Electric (GE) announced that Alstom's board has unanimously decided to recommend GE's offer to acquire its power and grid businesses for an enterprise value of $13.5 billion in cash. Upon closure of the deal, GE and Alstom will form three joint ventures for grid, renewables and global nuclear and French steam. GE also signed an agreement to sell its signaling business to Alstom for $825 million. Meanwhile, to facilitate the deal, Bouygues said it would divest 20 of its stake in Alstom in favor of the French government.

International Paper (IP) announced the definitive distribution ratio for the spin-off of its distribution solutions business, xpedx. On the distribution date of July 1st, International Paper shareholders will receive 0.0188 shares of Veritiv (VRTV) common stock for each share of International Paper they own.