The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to move back to the upside after ending last Friday's trading modestly lower.
Optimism about an eventual agreement on raising the U.S. debt ceiling may generate early buying interest following comments from Treasury Secretary Janet Yellen.
In an interview with the Wall Street Journal, Yellen said the administration and congressional Republicans are making progress in their negotiations over federal spending and raising the debt limit.
"I'm hopeful. I think the negotiations are very active. I'm told they have found some areas of agreement," Yellen said in an interview following a meeting of G-7 finance ministers in Japan on Saturday.
Overall trading activity may remain somewhat subdued, however, as traders look ahead to the release of some key economic data in the coming days.
Traders are likely to keep an eye on reports on retail sales, industrial production and housing starts, looking for additional clues about the outlook for the U.S. economy.
Remarks by Federal Reserve officials are also likely to attract attention this week, with Fed Chair Jerome Powell due to participate in a Perspectives on Monetary Policy panel before the Thomas Laubach Research Conference on Friday.
Following the downturn seen in morning trading on Friday, stocks showed a notable recovery attempt in the latter part of the session. The major averages climbed well off their worst levels of the day but still closed in the red.
The tech-heavy Nasdaq fell 43.76 points or 0.4 percent to 12,284.74 and the S&P 500 dipped 6.54 points or 0.2 percent to 4,124.08, while the Dow edged down just 8.89 points or less than a tenth of a percent to 33,300.62.
While the Dow ended the day just below the unchanged line, the blue chip index still closed lower for the fifth consecutive session.
For the week, the Dow slumped by 1.1 percent and the S&P 500 fell by 0.3 percent, but the Nasdaq climbed by 0.4 percent.
The early downturn on Wall Street came following the release of a report from the University of Michigan showing U.S. consumer sentiment deteriorated by much more than anticipated in the month of May.
The report said the consumer sentiment index tumbled to 57.7 in May from 63.5 in April, while economists had expected the index to edge down to 63.0.
With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 56.8 last November.
"While current incoming macroeconomic data show no sign of recession, consumers' worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff," said Surveys of Consumers Director Joanne Hsu.
She added, "Throughout the current inflationary episode, consumers have shown resilience under strong labor markets, but their anticipation of a recession will lead them to pull back when signs of weakness emerge."
Hsu also said year-ahead inflation expectations receded slightly to 4.5 percent in May after spiking to 4.6 percent in April.
Meanwhile, long-run inflation expectations rose to 3.2 percent in May from 3.0 percent in April, reaching their highest reading since 2011.
Worries about the debt ceiling crisis also continued to hang over the markets, with the postponement of a meeting between President Joe Biden and top lawmakers adding to jitters about a potential default.
"The discussion between the U.S. president and Congress around the debt ceiling issue could increasingly become a pain point for the stock market as the potential date for a default approaches," said DHF Capital CEO Bas Kooijman. "A U.S. default could have a tremendously negative impact on the global economy and on the financial system."
"In this regard, some banks have started putting in place contingency plans to face a potential default," he added. "As such, investors could be monitoring the developments around this issue every step of the way in the coming days."
Most of the major sectors ended the day showing only modest moves, contributing to the relatively lackluster close by the broader markets.
Airline and banking stocks saw some weakness on the day, while natural gas stocks moved notably higher along with the price of the commodity.
Commodity, Currency Markets
Crude oil futures are climbing $0.53 to $70.57 a barrel after sliding $0.83 to $70.04 a barrel last Friday. Meanwhile, after edging down $0.70 to $2,019.80 an ounce in the previous session, gold futures are inching up $0.30 to $2,020.10 an ounce.
On the currency front, the U.S. dollar is trading at 135.70 yen versus the 135.70 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0877 compared to last Friday's $1.0849.
Asia
Asian stocks ended mostly higher on Monday as investors awaited key U.S. and Chinese data as well as speeches from Federal Reserve officials this week for additional cues on the global economic outlook.
Worries over a standoff on raising the U.S. government's $31.4 trillion borrowing limit kept the underlying mood cautious.
The U.S. dollar hit a five-week high against major peers and gold edged higher, while oil prices slipped on concerns about fuel demand in the top global oil consumers, the United States and China.
The Turkish lira held near a two-month low versus the dollar as the country appeared headed for a runoff presidential election. The Thai Baht rallied almost 1 percent after the opposition secured a stunning election win on Sunday.
China's Shanghai Composite Index jumped 1.2 percent to 3,310.74 as the country's central bank injected more long-term liquidity into the financial system for the sixth month in a bid to bolster economic growth.
Hong Kong's Hang Seng Index surged 1.8 percent to 19,971.13 ahead of Chinese industrial production, retail sales and fixed asset investment data due on Tuesday.
Japanese shares climbed to reach an 18-month high, with a weakening yen and robust corporate earnings boosting investor sentiment.
The Nikkei 225 Index climbed 0.8 percent to 29,626.34. while the broader Topix closed 0.9 percent higher at 2,114.85.
Asahi Group rallied 3.4 percent, Shiseido jumped 5.2 percent, SBI Shinsei Bank spiked 8.6 percent and bearings-maker NSK soared 13.5 percent after posting strong earnings. Among those that lost ground, medical equipment maker Olympus Corp. plunged 6.8 percent.
Seoul stocks inched higher in cautious trade ahead of a meeting between U.S. President Biden and congressional leaders on Tuesday at the White House over the debt limit. The Kospi rose 0.2 percent to 2,479.35.
Australian markets ended slightly higher, reversing early losses. The benchmark S&P/ASX 200 Index edged up 0.1 percent to 7,267.10, as gains in the mining sector outweighed losses among banks. The broader All Ordinaries Index finished marginally higher at 7,460.50.
Gold miner Newcrest advanced 1.5 percent after its board recommended a $17.8 billion takeover offer from U.S. miner Newmont Goldcorp Corp.
Likewise, InvoCare soared more than 12 percent after it revealed a higher A$1.86 billion ($1.26 billion) offer from global private equity firm TPG.
Europe
European stocks have risen on Monday as investors assess the results of Turkey's presidential election and looked for progress in talks on the U.S. debt ceiling.
Traders have shrugged off data showing that Eurozone industrial production fell more than expected in March.
Industrial output declined 4.1 percent compared with the previous month after a 1.5 percent increase in February, Eurostat said.
Elsewhere, Germany's wholesale prices logged their first decline since December 2020, driven by a sharp drop in mineral oil product prices, data published by Destatis revealed.
The wholesale price index declined 0.5 percent in April from the last year following March's 2.0 percent increase.
The euro was trading higher after the European Commission, the executive arm of the EU, said that Eurozone economic growth would be faster than previously forecast this year and next.
In its regular forecast for the 20 countries that share the euro, the European Commission also raised its forecasts for inflation in the region and warned of tighter financing conditions.
While the U.K.'s FTSE 100 Index has risen by 0.4 percent, the French CAC 40 Index is up by 0.2 percent and the German DAX Index is up by 0.1 percent.
Germany's Siemens Energy, which supplies equipment and services to the power sector, has rallied after adjusting its outlook for fiscal year 2023.
French insurer Axa has also shown a strong move to the upside after reporting an increase in first quarter gross written premiums.
British lender HSBC Holdings has also risen after it provided a profitable outlook for its business in Asia, saying the region is positioned to serve the rest of the world.
Group Chief Executive Noel Quinn commented, "In addition to our core strength in Hong Kong, we now have growth engines in mainland China, India, Singapore and beyond."
Mining stocks are higher after China's central bank injected more liquidity in the banking system to shore up economic growth. Anglo American, Antofagasta and Glencore have all moved notably higher.
Diploma Plc has also jumped after reporting higher pre-tax profit and revenue growth in its half-year.
Meanwhile, British American Tobacco has declined after appointing finance director Tadeu Marroco as its CEO.
U.S. Economic Reports
The New York Fed released a report this morning showing a substantial downturn in regional manufacturing activity in the month of May.
The report said the general business conditions index plunged to a negative 31.8 in May from a positive 10.8 in April, with a negative reading indicating a contraction. Economists had expected the index to drop to a negative 2.5.
Minneapolis Federal Reserve President Neel Kashkari is due to participate in a fireside chat before the ACEC Minnesota Transportation Conference & Expo at 9:15 am ET.
At 12:30 pm ET, Richmond Federal Reserve Bnk President Thomas Barkin is scheduled to moderate a luncheon keynote before the Federal Reserve Bank of Atlanta 2023 Financial Markets Conference.
Stocks In Focus
Shares of Magellan Midstream Partners (MMP) are moving sharply higher in pre-market trading after the pipeline operator agreed to be acquired by ONEOK (OKE) in a cash-and-stock transaction valued at approximately $18.8 billion.
Chemical company DuPont (DD) may also see initial strength after Deutsche Bank upgraded its rating on the company's stock to Buy from Hold.
On the other hand, shares of Sofi Technologies (SOFI) may come under pressure after Wedbush downgraded its rating on the online personal finance company to Underperform from Neutral.
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