Wall Street eyes cautious start to week of central bank watching

Stock futures pointed to small gains for Wall Street on Monday, as investors returning from the Thanksgiving break get ready for central bank moves later in the week.

The week could be volatile for markets, with a policy meeting at the European Central Bank and a speech by Federal Reserve Chairwoman Janet Yellen on the docket. Friday brings the last batch of U.S. jobs numbers before the Fed’s December policy meeting and a crucial meeting of the Organization of the Petroleum Exporting Countries.

Against that backdrop, the mood was cautious on Monday, with Dow Jones Industrial Average futures YMZ5, +0.11% up 23 points to 17,824 and those for the S&P 500 ESZ5, +0.07% down 1.9 points to 2,088.25. Nasdaq 100 futures NQZ5, +0.21% rose 1 point to 4,683.50.

The major indexes were left mostly flat for the holiday-shortened week. For November, the Nasdaq Composite COMP, +0.22% is looking at a gain of around 1.5%, while the Dow industrials DJIA, -0.08% and S&P 500 index SPX, +0.06% are less buoyant, set to add around 0.8% and 0.5%, respectively.

Reason to rally? The Chicago Purchasing Managers Index for November will be released at 9:45 a.m. Eastern Time, followed by pending-home sales for October at 10 a.m. Eastern. This week, a steady trickle of data builds to the November nonfarm payrolls report on Friday.

Investors will also be watching closely a speech by the Fed’s Yellen on Wednesday. On Thursday, they’ll look to see whether ECB President Mario Draghi delivers further easing as expected, and whether any action taken will be enough to keep markets happy.

The market is in position to rally and could reach new record highs by the end of the year, said Peter Cardillo, chief market economist at First Standard Financial. He added that a potential Fed hike has largely been factored in.

“I still think we’ll see new highs, between 2,175 and 2,200 by year end [on the S&P 500], in spite of a possible change in monetary policy and in spite of a strong dollar,” he said. “The fact that the ECB is likely to increase stimulus is a plus for global equities.

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