U.S. Stocks May Give Back Ground Following Yesterday's Rally

(RTTNews) - Following the strong upward move seen in the previous sessions, stocks may give back ground in early trading on Friday. The major index futures are currently pointing to a slightly lower open for the markets, with the S&P 500 futures down by 0.1 percent.

Profit taking may contribute to initial weakness on Wall Street following yesterday's rally, which lifted the major averages to new record closing highs.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve's monetary policy announcement next Wednesday.

With recent data showing relatively subdued inflation and a weakening labor market, the Fed is widely expected to lower interest rates by at least a quarter point.

CME Group's FedWatch Tool is currently indicating a 92.5 percent chance the Fed will cut rates by 25 basis points and a slim 7.5 percent chance of a half-point rate cut.

Traders are likely to pay close attention to the Fed's accompanying statement as well as Fed Chair Jerome Powell's post-meeting comments for clues about the likelihood of further rate cuts.

Currently, the Fed is widely expected to lower rates by another 25 basis points at both its October and December meetings, although Powell is likely to say future rate cuts will depend on incoming economic data.

Not long after the start of trading, the University of Michigan is scheduled to release its preliminary reading on consumer sentiment in the month of September. The consumer sentiment index is expected to edge down to 58.0 in September after falling to 58.2 in August.

Stocks showed a strong move to the upside during trading on Thursday, with the major averages all moving notably higher following the mixed performance seen during Wednesday's session. With the upward move, the major averages all reached new record closing highs.

The major averages finished the session just off their best levels of the day. The Dow surged 617.08 points or 1.4 percent to 46,108.00, the S&P 500 jumped 55.43 points or 0.9 percent to 6,587.47 and the Nasdaq climbed 157.01 points or 0.7 percent to 22,043.07.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index shot up by 1.2 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is up by 0.4 percent, the German DAX Index is down by 0.1 percent and the French CAC 40 Index is down by 0.3 percent.

In commodities trading, crude oil futures are surging $1.41 to $63.78 a barrel after tumbling $1.30 to $62.37 a barrel on Thursday. Meanwhile, after slipping $8.40 to $3,673.60 an ounce in the previous session, gold futures are inching up $5.30 to $3,678.90 an ounce.

On the currency front, the U.S. dollar is trading at 147.96 yen versus the 147.21 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1705 compared to yesterday's $1.1734.