MW: U.S. stocks set to take a breather after three-week rally
While oil built on recent gains Monday, weaker stock futures indicate investor reluctance to push equities higher at the open.
Dow industrials YMH6, -0.25% futures fell 33 points to 16,932, while those for the S&P 500 ESH6, -0.36% dipped 6.40 points to 1,988.50. Nasdaq 100 futures NQH6, -0.45% eased 18 points to 4,304.25.
Wall Street stocks closed out their third straight week of gains on Friday, with the S&P SPX, +0.33% and Dow industrials DJIA, +0.37% posting their highest settlements since Jan. 6. The S&P closed at 1,999.99 on Friday, within a hair of the psychologically significant 2,000 line.
Those advances in part followed gains for oil prices, which rose nearly 10% last week. Oil CLJ6, +1.67% continued its trajectory higher on Monday, though equities thus far failed to follow suit.
“The temptation to go short after such a strong bounce remains high—especially given the close below 2,000 on the S&P 500 on Friday—but beneath the surface investors still don’t seem confident about the longevity of the rally,” said Chris Beauchamp, senior market analyst at IG, in a note.
However, buying spurred by a “fear of missing out” hasn’t kicked in, which could mean the market is still due for another leg higher. “We should probably only worry when everyone gets bullish again,” Beauchamp added.
Read: ‘Fear of missing out’ could give this rally its next leg up
A warning for banks
The Bank for International Settlements on Sunday warned that central banks are running out of policy options and of the “unintended consequences” of negative interest rates. That comes ahead of Thursday’s meeting of the European Central Bank, which itself is expected to lower a key rate further into negative territory.
Europe stocks also struggled, with the Stoxx Europe 600 SXXP, -0.78% down 0.9%, led by losses for banks and oil stocks. The Nikkei 225 NIK, -0.61% closed down 0.6%, but the Shanghai Composite SHCOMP, +0.81% rose 0.8% after officials over the weekend laid out China’s plans to prop up economic growth.
Read: China’s economy aims for up to 7% growth this year
Gold GCJ6, +0.05% and the dollar DXY, +0.16% both weakened on Monday.
