By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. stock futures fell on Monday,
indicating a lower open on Wall Street, as investors paused after a
big rally last week.
Across the Atlantic relatively sanguine results of a series of
tests of the health of the European banking system were
overshadowed by worry over weak German data, sending European stock
markets lower.
More data likely will dictate Monday's sentiment in the U.S. as
investors turn a wary eye to this week's Federal Open Market
Committee meeting.
Futures for the S&P 500 index (SPZ4) fell 8 points to
1,951.60, while those for the Dow Jones Industrial Average (DJZ4)
fell 54 points to 16,682. Futures for the Nasdaq-100 index (NDZ4)
eased 10 points to 4,025.00.
The S&P 500 (SPX) posted its biggest weekly gain of 2014
last week, rising 4.1%, with stocks lifted by upbeat corporate
results and strong housing data. This week, markets will focus on
the Federal Open Market Committee meeting, where the central bank
is expected to announce the end of quantitative easing. How QE
worked in the U.S. -- and could work in Europe.
Traders will be looking to see if the Fed drops the"considerable
period" language in referencing its plans keeping rates low, at its
two-day policy meeting, which concludes Wednesday. As several Fed
officials have come out with dovish comments recently, investors
largely expect that guidance to be reiterated.
"There will be no press conference for this meeting therefore,
the chances for a shock pause in tapering is very low," said Nour
Al-Hammoury, chief market strategist at ADS Securities in Abu
Dhabi, in a note. He added the market would likely not see the sort
of wild swings that have characterized benchmark averages over the
past few weeks until that Fed announcement.
Goldman sees another 10% gain for stocks: The S&P 500 should
climb to 2,050 by year-end and rise by 10% to 2,150 in 10 months,
said Goldman Sachs's chief equity strategist David Kostin in a note
to clients Friday. He said that move will come as "investors
recognize the durability of U.S. growth, despite faltering global
activity."
The September reading on pending-home sales will be released at
10 a.m. Eastern Time. The week will also deliver data on durable
goods, gross domestic product and consumer spending. Growth data
will be the highlight, with the government expected to report
economic expansion of 3% in the third quarter.
Stocks to watch: Merck & Co. Inc.(MRK) tightened its outlook
for the rest of the year as expiring patents weighed on sales. Its
top line fell short, but shares edged up in premarket.
Allergan Inc. (AGN) shares rose 1.5% after Valeant
Pharmaceuticals International Inc. (VRX) said it was prepared to
improve its offer for Allergan to a value of at least $200 a
share.
Health-care and energy sectors are expected to dominate investor
attention this week as they deliver results. After the close on
Monday, Twitter Inc. (TWTR) will report earnings. What to look for
in Twitter's results
Other markets: European stocks fell after the German Ifo index
of business sentiment fell to 103.2, falling short of forecasts.
The survey's outlook for the German economy also deteriorated
again. Banks were getting a lift from the results of regulators'
stress tests, which found most lenders in good health.
In Asia, markets had a mixed day with Chinese stocks off, but
Japan's Nikkei index climbing. Oil (CLZ4) futures fell, while gold
(GCZ4) prices were mostly unchanged.
Stocks and ETFs linked to Brazil came under sharp pressure in
premarket action, after President Dilma Rousseff won a second term
on Sunday, defeating the conservative Aecio Neves in a narrow
victory. Economists worry that four more years of Rousseff will
increase Brazil's economic downturn.
The Direxion Daily Brazil Bull 3X Shares ETF (BRZU) tumbled 30%,
while U.S.-listed shares of Petroleo Brasileiro SA (PBR) slid 16%
in premarket action.
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