Recent Downward Likely To Weigh On Wall Street

(RTTNews) - The major U.S. index futures are pointing to a lower opening on Monday, with stocks likely to see further downside following the sell-off in recent sessions.

Recent downward momentum is likely to persist, although trading activity may be subdued ahead of the Christmas Day holiday on Tuesday.

Many traders are likely to remain away from their desks to get a head start on the holiday, as the markets are due to close at 1 pm ET.

Nonetheless, today marks the first day traders will an opportunity to react to the partial government shutdown that took effect at midnight last Friday.

The partial shutdown is likely to continue until after Christmas, as President Donald Trump and Democratic lawmakers remain "far apart" on the issue of funding for the president's controversial border wall.

The Senate adjourned Saturday without a deal to re-open the shut down parts of the federal government and is not expected to reconvene until Thursday, December 27th.

The ongoing shutdown comes after Vice President Mike Pence met with Senate Minority Leader Chuck Schumer, D-N.Y., but a spokesman for the Democratic leader said, "Unfortunately, we're still very far apart."

Senate Majority Leader Mitch McConnell, R-Ken., noted party leaders have pushed the "pause button" on holding votes until Trump and Democrats reach an agreement.

With the government shutdown looming, stocks moved sharply lower over the course of the trading day on Friday. The major averages extended the sell-off seen in recent sessions, once again ending the day at their lowest closing levels in over a year.

The major averages climbed off their lows in late-day trading but still posted steep losses. The Dow slumped 414.23 points or 1.8 percent to 22,445.37, the Nasdaq plummeted 195.41 points or 3 percent to 6,332.99 and the S&P 500 tumbled 50.80 points or 2.1 percent to 2,416.62.

For the week, the Nasdaq nosedived by 8.4 percent, while the S&P 500 and the Dow plunged by 7.1 percent and 6.9 percent, respectively.

The extended sell-off on Wall Street came as traders kept an eye on developments on Capitol Hill, with the shutdown of several key government agencies just hours away.

Ahead of a midnight deadline, lawmakers appeared to be at an impasse over funding for President Donald Trump's controversial wall on the border with Mexico.

The currently Republican-controlled House voted 217 to 185 in favor of a short-term spending bill late Thursday, although the bill includes more than $5 billion for the construction of the wall opposed by Democrats.

House Republicans took up the bill, which also provides $7.8 billion for disaster relief, after Trump said he would not sign a stopgap spending approved the Senate that did not include wall funding.

The Senate bill passed by a voice vote Wednesday night would fund key government agencies through February 8th but pushes a debate over funding for the wall into the next Congress, when Democrats will control the House.

Trump has sought to blame Democrats for the potential shutdown after previously saying he would be "proud to shut down the government for border security," an issue that helped propel him to the White House.

"The Democrats, whose votes we need in the Senate, will probably vote against Border Security and the Wall even though they know it is DESPERATELY NEEDED," Trump said in a post on Twitter.

"If the Dems vote no, there will be a shutdown that will last for a very long time," he added. "People don't want Open Borders and Crime!"

Meanwhile, traders largely shrugged off mixed economic data on durable goods orders, third quarter GDP, personal income and spending and consumer sentiment.

Biotechnology stocks showed a substantial move to the downside over the course of the session, dragging the NYSE Arca Biotechnology Index down by 3.8 percent.

With the steep drop, the biotechnology index extended a recent nosedive, tumbling to its lowest closing level in over a year.

Significant weakness was also visible among software stocks, as reflected by the Dow Jones Software Index's 3.4 percent slump to a seven-month closing low.

Tobacco stocks also showed a notable move to the downside, resulting in a 2.5 percent drop by the NYSE Arca Tobacco Index.

Altria (MO) posted a steep loss after Citi downgraded its rating on the tobacco producer's stock to Sell from Neutral.

Retail, telecom, housing, and computer hardware stocks also saw considerable weakness on the day, reflecting yet another broad-based sell-off on Wall Street.

Commodity, Currency Markets

Crude oil futures are sliding $0.86 to $44.73 a barrel after falling $0.29 to $45.49 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,265.30, up $7.20 from the previous session's close of $1,258.10. On Friday, gold dropped $9.80.

On the currency front, the U.S. dollar is trading at 110.90 yen compared to the 111.22 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1405 compared to last Friday's $1.1372.

Asia

Asian stocks ended mixed in thin pre-Christmas trading on Monday as investors fretted about the impact of a partial U.S. government shutdown and increasing trade tensions, with White House trade advisor Peter Navarro saying the trade war between the U.S. and China would not come to an end in the near term. The Japanese markets were closed for the Emperor's Birthday holiday.

The U.S. dollar slipped as political uncertainty weighed and Federal Reserve Bank of New York President John Williams told CNBC the U.S. central bank is open to reconsidering its views on rate hikes next year.

Oil prices inched higher in Asian trading after oil ministers from OPEC nations said they expect prices will arrest their recent slide and rebalance early next year.

Chinese shares rose after the country's top policymakers signaled more support for the economy next year with tax cuts and other policy measures.

The benchmark Shanghai Composite Index rose 10.76 points or 0.4 percent to 2,527.01, although Hong Kong's Hang Seng Index fell 102.04 points or 0.4 percent to 25,651.38.

Australian stocks finished modestly higher as markets closed early for the Christmas holidays. The benchmark S&P/ASX 200 Index climbed 26.20 points or 0.5 percent to 5,493.80 in thin trading, while the broader All Ordinaries Index rose 26.30 points or 0.5 percent to 5,559.60.

The big four banks ended up between 0.1 percent and 0.3 percent. QBE Insurance advanced 1.4 percent and Insurance Australia climbed 1.2 percent after some insurers flagged the cost of claims from a hailstorm in Sydney.

Myob Group soared 14.6 percent after the accounting software maker recommended a takeover offer from U.S. private equity giant KKR & Co.

Seoul stocks ended lower on worries over political instability in the U.S. amid signs that the partial shutdown of the U.S. federal government, which began at 12:01 a.m. Saturday, will last at least a week. The benchmark Kospi slid 6.48 points or 0.3 percent to close at 2,055.01.

Europe

European stocks fell on Monday, with lingering trade tensions and concerns over a partial U.S. government shutdown keeping investors nervous ahead of the Christmas break.

The French CAC 40 Index tumbled by 1.5 percent and the U.K.'s FTSE 100 Index fell by 0.5 percent. Trading volumes remained thin, with markets in Germany and Italy shut on Christmas Eve.

The partial U.S. government shutdown is expected to continue into January, when the new Congress convenes and Democrats take over the House of Representatives.

Meanwhile, Treasury Secretary Steven Mnuchin moved to quell a firestorm over repeated attacks on the Federal Reserve, saying President Donald Trump is opposed to the Fed's rate hike campaign but has never suggested firing Chairman Jerome Powell.

After calling bank CEOs on Sunday in an apparent attempt to check on system liquidity, Mnuchin will chair a meeting of the President's Working Group on Financial Markets later today.

Banks led the decliners, while British advertising firm WPP and French luxury goods conglomerate LVMH also moved notably lower.

U.S. Economic Reports

The economic calendar for the week starts off quiet due to the Christmas Day holiday on Tuesday, although reports on new home sales, consumer confidence, and pending home sales may attract attention later in the week.

At 11:30 am ET, the Treasury Department is due to announce the results of its auction of $40 billion worth of two-year notes.