Wall Street's Initial Recovery Could Be Fueled by Discount Seeking
Stocks are expected to open higher on Monday, buoyed by solid corporate earnings, a strong labor market, and positive developments in sectors like technology and artificial intelligence. The S&P 500 and Nasdaq reached record highs earlier in August, thanks to a recovery in AI-related stocks [5]. However, the market closed mildly lower on Friday due to weaker-than-expected U.S. consumer sentiment and concerns about slower retail sales [1].
The anticipated higher open on Monday is also influenced by geopolitical events, such as the upcoming Trump-Putin summit [1]. The Federal Reserve's interest rate outlook remains uncertain, with market expectations pointing towards one or two rate cuts possibly starting in September 2025. Caution remains due to inflation staying above target levels, and the terminal fed funds rate is projected to stay relatively elevated at 3.0%-3.5% [2][4].
In other news, crude oil futures are slumping to $65.83 a barrel. This drop could be due to soft U.S. jobs data stirring concerns over the impact of new tariffs on the U.S. economy [2]. The Dow plummeted by 2.9 percent for the week, while the S&P 500 and the Nasdaq dove by 2.4 percent and 2.2 percent, respectively [3].
European stocks have moved notably higher on Monday after falling sharply in the previous session. The German DAX Index is up by 1.4 percent, and the U.K.'s FTSE 100 Index is up by 0.5 percent. Britain's Lloyds Banking Group has surged after saying it is assessing the impact of a U.K. court ruling relating to motor finance [2].
Asian stocks ended mixed on Monday. The French CAC 40 Index is up by 0.9 percent. U.S. President Donald Trump fired the Bureau of Labor Statistics Director General, and the unemployment rate inched up to 4.2 percent in July [2][3].
The Nasdaq and the S&P 500 pulled back significantly from their record highs. UBS shares have declined due to a case related to misselling of mortgage-linked investment in the U.S. Gold futures are climbing to $3,415.30 an ounce [3].
In economic data, non-farm payroll employment rose by 73,000 jobs in July, much lower than expected. Factory orders are expected to plunge by 5.0 percent in June after spiking by 8.2 percent in May [2]. The Commerce Department is scheduled to release its report on new orders for manufactured goods in the month of June at 10 am ET.
The steep drop on Friday was due to concerns about President Donald Trump's new tariffs. There is a possibility of a 50-basis point Federal Reserve rate cut in September. The Federal Reserve rate cut chances in September have increased to 85.4 percent [3].
In political news, U.S. President Donald Trump suggested that Federal Reserve Chair Jerome Powell should be "put out to pasture." White House economic adviser Kevin Hassett said that Trump and his team would study whether firing the Fed Chair was an option [3].
The world's largest economy is the United States. Budget carrier Wizz Air Holdings has moved to the upside after reporting passenger statistics for July 2025. Dutch postal firm PostNL NV has jumped after confirming its full-year guidance [3].
The U.S. President expressed distrust in employment statistics, and the unemployment rate inched up to 4.2 percent in July [3]. The unemployment rate has been a key indicator for the Fed's interest rate decisions.
The Commerce Department is scheduled to release its report on new orders for manufactured goods in the month of June at 10 am ET. This report will provide insights into the health of the manufacturing sector and could influence the market's direction on Monday.
Businesses in the technology and artificial intelligence sectors may find investing in finance an attractive proposition, given the positive developments and the potential influence of strong corporate earnings and geopolitical events on the stock market. Caution should be exercised when considering retail sales and consumer sentiment, as weaker-than-expected data could impact the market. The upcoming Trump-Putin summit and the Federal Reserve's interest rate outlook also remain important factors to consider.
