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U.S. equity futures were mixed in early Monday trading, while Treasury yields and the dollar held steady, as calm returned to global stock markets ahead of what could be a key week of economic data on Wall Street.
Stocks ended last Friday on a high note, clawing back nearly all of the losses from the global volatility wave that gripped markets at the start of the week amid a rebound in megacap tech names and normalizing Treasury bond yields.
The market’s benchmark volatility gauge, the CBOE Group’s VIX index, retreated from its historic early-week surge, which lifted it past the $65 mark, and was last seen trading at around $20.73 heading into the main Monday session.
At that level, traders are expecting daily swings of around 1.3%, or 69 points, for the S&P 500 over the next thirty days.
“However, while the VIX is dropping significantly, it remains at elevated levels, suggesting that the market is still pricing in a decent amount of volatility,” Saxo Bank strategists wrote Monday. “This means that despite the recent decline, the situation should be monitored closely as the market continues to express a cautious sentiment.”
With much of the so-called yen carry trade now unwound, and the U.S. dollar holding at 103.165 against a basket of its global peers, investor focus is likely to shift to this week’s slate of economic data, which includes a key reading of July inflation on Wednesday, retail sales figures on Thursday and housing starts data on Friday.
The CBOE Group’s VIX index has retreated from its historic surge last week, but remains at elevated levels for the year.
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Only nine S&P 500 companies are scheduled to report second quarter earnings this week, but that includes retail heavyweights Home Depot (HD) and Walmart (WMT) , both of which will provide key insights into consumer spending trends heading into the autumn months.
With around 90% of the S&P 500 reporting June quarter earnings so far, collective profits are set to rise 12.4% from last year to $501 billion, according to LSEG data.
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Looking into the current quarter forecast, investors see third quarter profit growth slowing to around 6.1%, but the overall total rising sequentially to $515 billion.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which remains down 2.13% for the quarter, were priced for a modest 2 point opening bell gain.
Futures tied to the Dow Jones Industrial Average, meanwhile, suggest a 5 point decline while the tech-focused Nasdaq is called 30 points higher to start the trading week.
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In overseas markets, Europe’s Stoxx 600 was marked 0.04% lower in Frankfurt as traders eyed the opening bell on Wall Street as well as moves in the currency markets, while Britain’s FTSE 100 rose 0.45% in London on the strength of higher oil and commodity prices.
Overnight in Asia, Japan’s Nikkei 225 closed 0.56% higher as the yen stabilized at 147.32 against the U.S. dollar, while the regional MSCI ex-Japan benchmark added 0.42% into the close of trading.
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