ADVFN Newsdesk 8.19.19

The major U.S. index futures are currently pointing to a higher opening on Monday following the substantial volatility seen in the markets last week.

Continued optimism about new global stimulus may contribute to initial buying interest after the People’s Bank of China said it would use market-based reform methods to help lower real lending rates and prop up a slowing economy.

News that President Donald Trump?s administration is once again delaying restrictions on Chinese tech giant Huawei may also contribute to early strength on Wall Street.

Commerce Secretary Wilbur Ross revealed the news in an appearance on the Fox Business Network, announcing a ?temporary general license? set to expire on Monday will be extended for another 90 days.

The move will allow Huawei to continue purchasing supplies from U.S. companies despite being placed on an economic blacklist back in May.

?There is another 90 days for the U.S. telecom companies, some of the rural companies are dependent on wild ways,? Ross said. ?So we’re giving them a little more time to wean themselves off. But there are no specific licenses being granted for anything.?

The upward momentum also comes after Trump?s economic advisers took to the Sunday talk shows to downplay concerns about a possible recession.

Trump himself told reporters that he does not foresee an economic downturn even after last week?s yield curve inversion, which is widely seen as an early recession indicator.

?I don?t think we?re having a recession,? Trump said. ?We?re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they?re loaded up with money.?

Following the lackluster performance seen on Thursday, stocks moved sharply higher over the course of the trading day on Friday. The major averages all climbed firmly into positive territory after ending Thursday’s trading mixed.

The major averages reached new highs late in the session but pulled back going into the close. The Dow jumped 306.62 points or 1.2 percent to 25,886.01, the Nasdaq soared 129.38 points or 1.7 percent to 7,895.99 and the S&P 500 surged up 41.08 points or 1.4 percent to 2,888.68.

Despite the strong gains on the day, the major averages moved notably lower for the week. The Dow tumbled by 1.5 percent, the S&P 500 slumped by 1 percent and the Nasdaq slid by 0.8 percent.

The rally on Wall Street partly reflected optimism about the world’s central banks providing aggressive stimulus in order to prevent a global recession.

European Central Bank official Olli Rehn helped inspire confidence after expressing the need for a significant easing package in September to support the flagging eurozone economy.

The expectations for more stimulus contributed to a pullback by U.S. treasuries and a subsequent increase in bond yields.

The yield on the benchmark ten-year note dropped below the two-year yield on Wednesday, sparking fears of an impending recession and a sell-off on Wall Street.

Meanwhile, traders largely shrugged off a report from the University of Michigan showing a significant deterioration in U.S. consumer sentiment in August.

The report said the consumer sentiment index tumbled to 92.1 in August after inching up to 98.4 in July. Economists had expected the index to dip to 97.2.

With the much steeper than expected drop, the consumer sentiment index slumped to its lowest level since hitting 91.2 in January.

The deterioration in consumer sentiment came amid concerns about the proposed increase in tariffs on Chinese imports as well as the reasoning behind the Federal Reserve’s interest rate cut.

“The main takeaway for consumers from the first cut in interest rates in a decade was to increase apprehensions about a possible recession,” said Surveys of Consumers chief economist Richard Curtin.

He added, “Consumers concluded, following the Fed’s lead, that they may need to reduce spending in anticipation of a potential recession.”

Curtin said consumers are likely to reduce their pace of spending but still help keep the economy out of recession at least through mid-2020.

A separate report from the Commerce Department showed an unexpected slump in housing starts in July but a sharper than expected increase in building permits.

The report said housing starts tumbled by 4.0 percent to an annual rate of 1.191 million from the revised June estimate of 1.241 million.

The drop surprised economists, who had expected housing starts to edge up by 0.3 percent to a rate of 1.257 million from the 1.253 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits spiked by 8.4 percent to a rate of 1.336 million in July from a revised 1.232 million in June.

Building permits, an indicator of future housing demand, had been expected to jump by 4.1 percent to 1.270 million from the 1.220 million originally reported for the previous month.

Oil service stocks showed a strong move to the upside after falling sharply over the past two weeks, driving the Philadelphia Oil Service Index up by 4 percent. The index bounced off its lowest closing level in eighteen years. The rebound by oil service stocks came amid an increase by the price of crude oil.

Considerable strength was also visible among semiconductor stocks, as reflected by the 2.8 percent jump by the Philadelphia Semiconductor Index.

Graphics chipmaker Nvidia (NVDA) led the sector higher after reporting second quarter results that exceeded analyst estimates on both the top and bottom lines.

Bargain hunting also contributed to significant strength among banking stocks, resulting in a 2.5 percent spike by the KBW Bank Index.

Natural gas, computer hardware, biotechnology, and transportation stocks also moved notably higher, while gold stocks were among the few groups to buck the uptrend.

U.S. Economic Reports

Following last week?s deluge of data, the economic calendar for this week is relatively light, although reports on new and existing home sales may attract attention in the coming days along with the minutes of the latest Federal Reserve meeting and a speech by Fed Chairman Jerome Powell.

Stocks in Focus

Shares of Estée Lauder (EL) are showing a significant move to the upside in pre-market trader after the beauty products company reported better than expected fiscal fourth quarter results and provided upbeat guidance.

Food service company Aramark (ARMK) is also likely to see initial strength on news activist investor Mantle Ridge has built a 20 percent stake in the company.

On the other hand, shares of PG&E (PCG) are moving sharply lower in pre-market trading as the bankrupt utility remains in control of its restructuring after a federal judge rejected a move by investors to put forward competing plans.