US open: Stocks flat to slightly higher; Empire State manufacturing in focus

US stocks were flat to slightly higher in early trade on Monday following record highs last week.

At 1655 BST, the Dow Jones Industrial Average was unchanged, while the S&P 500 and the Nasdaq were both 0.1% higher.

David Morrison, senior market analyst at Trade Nation, said: "Looking forward, tomorrow sees the release of retail sales and industrial production.

"Then US markets are closed on Wednesday for the Juneteenth holiday. The general market tone remains bullish, with tech stocks in the vanguard, especially any with direct connections to generative AI. Nvidia continues to shine, and is trading at a fresh record high following its 10-for-1 stock split.

"Last week’s softer inflation numbers have helped boost sentiment, and the ‘more hawkish than anticipated’ FOMC ‘Dot Plot’ has largely been ignored. This showed that the majority of FOMC members now believe that one 25 basis point rate cut is appropriate before the year-end, down from three in March. Despite this, the CME’s FedWatch Tool suggests that the market doesn’t believe the Fed, as it continues to indicate two cuts, one in September and the second in December.

"This Friday sees the ‘triple witching hour’, when there’s the simultaneous expiry of stock options, stock index futures and stock index options. This can lead to increased volatility, particularly as this marks the half-year point, as well as a quarterly expiry."

On the macroeconomic front, a survey out earlier showed that manufacturing activity in the state of New York weakened again in June.

The Empire State manufacturing index ticked up 10 points to -6.0 but remained below the zero level.

The survey showed that new orders held steady, while shipments ticked higher. Delivery times shortened somewhat, and supply availability - a new monthly indicator now included in the survey - was little changed.

Inventories were flat and the labour market conditions remained weak, with employment and hours worked continuing to contract.

Firms were more optimistic about the outlook than they have been in more than two years, with the index for future business conditions up 16 points at 30.1. Nearly half of respondents expected conditions to be better in six months.

Richard Deitz, economic research advisor at the New York Fed, said: "Manufacturing conditions remained weak in New York State in June. Employment continued contracting, and capital spending plans remained flat.

"Despite lacklustre conditions, optimism about the six-month outlook rose to its highest level in over two years."

In corporate news, Best Buy rallied after UBS upgraded the stock to ‘buy’ from ‘neutral’ and lifted the price target to $106 from $85.

Elsewhere, Xponential Fitness surged more than 25% after it announced the appointment of Mark King as its new chief executive. King was most recently CEO of Taco Bell.