US stock futures are trading higher on Memorial Day, inflation and employment data in sight

U.S. stock futures are trading slightly higher this morning on Memorial Day following the release of the Chinese Manufacturing Purchasing Manager (PMI) Index, while most participants will be watching some major events this week, including readings of the Chinese Manufacturing Purchasing Managers (PMI) Index. inflation data today, the OPEC + meeting on Tuesday and the release of the employment data on Friday.

Last week, major US equity indices finished higher, with the Nasdaq 100 leading the chart with a 2.2% gain – its best weekly performance since the beginning of April – while both the S&P 500 and the Dow Jones Industrial Average ended the same period unchanged.

However, the tech-backed Nasdaq ended the month with a slight 1% drop, while the Dow Jones posted a strong 2.1% gain. Over the same period, the S&P 500 posted gains of 0.7%.

DJIA’s E-mini futures are taking the lead during today’s early futures trading action as they are up 0.13% to 34,558 followed by the S&P 500 which advanced 0.08% to 4,206. Nasdaq futures are muted at 13,700.

This Monday, both the stock and bond markets will remain closed in observance of Memorial Day, while the futures market will see a shorter session ending at 1pm.

Key data released for the week includes inflation readings from Germany, Spain and Italy to be released this morning, while inflation data for the Eurozone will arrive tomorrow alongside the ISM Manufacturing PMI for the US.

In addition, the Organization of the Petroleum Exporting Countries (OPEC) and its closest allies, also known as OPEC +, will also meet on Tuesday to discuss policy and react to the latest developments in the oil market, including the potential reintroduction of Iranian crude oil production. . to the global market as the country continues to discuss a deal with the United States to remove long-term sanctions.

The cartel’s reaction to the Iranian situation is likely to set the tone for the commodity for the rest of the week, although analysts expect demand to continue to outstrip supply for the third and fourth quarters of the year on the back of a strong post. – pandemic recovery.

Finally, markets will look at Friday’s labor market report for the US, with non-farm wages and hourly rates in sight as the data could provide more insight into the pace of the recovery in the country and shape the inflation narrative in the in case wages start accelerating.

Dozens of companies they offered higher hourly rates in the North American country recently to entice Americans to apply for jobs with economists pointing out that stimulus checks and unemployment benefits can discourage people from considering returning to work.

According to Koyfin data, the unemployment rate is expected to land at 5.9% in April, a figure 20 basis points lower than last month’s reading. Meanwhile, the market expects a total of 650,000 jobs created last month, including 600,000 from the private sector.

Last month, employment data was far below estimates as unemployment rose 6.1% or 20 basis points higher than analysts’ forecasts for the period.

What is the future of US stock futures?

The S&P 500 has been trading somewhat in a range since mid-April as markets struggle to find direction between inflation concerns and weak tech sector performance.

Nasdaq 100 E-mini futures price chart (NQ) – 1 day candlestick view with multiple indicators – Source: TradingView

That said, the heavily tech Nasdaq 100 rebounded strongly from last month’s 12,955 level, forming a double-bottomed bullish pattern that pushed the index to current levels. The indicators for the Nasdaq are somewhat mixed at the moment, as the MACD oscillator sent a buy signal last week at almost the same time the index’s short-term moving averages recorded a deadly cross.

As data continues to be released throughout the week, it will become clearer to traders which of the two price action indicators most accurately predict the direction the market is taking.

At this point, the key support to watch for this index will be the 20-day simple moving average as a drop below that line could result in a low single-digit loss for the benchmark by the end of the week.

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