U.S. Stocks May Give Back Ground After Debt Rating Downgrade

(RTTNews) - After moving sharply higher in the previous week, stocks are likely to give back ground in early trading on Monday. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 1.0 percent.

Traders may look to cash in on last week's rally, which lifted the major averages to their best closing levels in over two months.

Last Monday's news of a U.S.-China trade deal temporarily slashing steep tariffs on each other's goods generated considerable buying interest that carried over throughout much of the week.

Negative sentiment may also be generated in reaction to news that Moody's has downgraded the U.S. debt rating by a notch to Aa1 from Aaa.

Moody's said the downgrade reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.

Shortly after the start of trading, the Conference Board is scheduled to release its report on leading economic indicators in the month of April.

The Conference Board's leading economic index is expected to decrease by 0.8 percent in April after falling by 0.7 percent in March.

After initially showing a lack of direction, stocks moved mostly higher over the course of the trading session on Friday. The major averages all climbed firmly into positive territory after closing mixed for two straight sessions.

The major averages ended the day near their highs of the session. The Dow advanced 331.99 points or 0.8 percent to 42,654.74, the S&P 500 climbed 41.45 points or 0.7 percent to 5,958.38 and the Nasdaq rose 98.78 points or 0.5 percent to 19,211.10.

For the week, the tech-heavy Nasdaq soared by 7.2 percent, the S&P 500 spiked by 5.3 percent and the Dow surged by 3.4 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index fell by 0.7 percent, while South Korea's Kospi slid by 0.9 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index is just below the unchanged line, the U.K.'s FTSE 100 Index is down by 0.5 percent and the French CAC 40 Index is down by 0.8 percent.

In commodities trading, crude oil futures are slipping $0.25 to $62.24 a barrel after climbing $0.87 to $62.49 a barrel last Friday. Meanwhile, after tumbling $39.30 to $3,187.30 an ounce in the previous session, gold futures are jumping $58.40 to $3,245.60 an ounce.

On the currency front, the U.S. dollar is trading at 144.94 yen versus the 145.70 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1262 compared to last Friday's $1.1163.