Wall Street Set to Struggle to Keep Trump Rally Going for Stocks

Wall Street was set for a battle to resume its post-election rally on Monday, with stock futures paring back an earlier sharper rise as investors showed signs of cashing in gains.

The dollar pulled back from its advance but remained higher across the board, while U.S. Treasury bonds came under renewed pressure.

Stock futures pared or reversed gains seen in Asia and early Europe trading hours. Dow Jones Industrial Average futures rose 44 points, or 0.2%, to 18,831, pulling back from gains of more than 100 points earlier. S&P 500 futures rose 1.4 points to 2,162.75, while Nasdaq-100 futures slipped 4.75 points to 4,744.75.

On Friday, the Dow recorded its biggest weekly gain since 2011 and a record close of 18,847.66. The S&P 500 saw its biggest weekly gain since October 2014, while the Nasdaq Composite rose 3.8%, its biggest one-week jump since February.

Hopes for an economic boost from President-elect Donald Trump's pro-growth plans have sent the Dow to record highs. But investors need to wait and see how Trump will work with Congress and how much fiscal slack he has to fund his ambitious spending plans, said Craig Erlam, senior market analyst at Oanda.

"For now, it will be all about the transition and who is going to be given the key positions in his team, which we should find out more about in the days ahead," Erlam said in a note Monday.

He pointed the finger at S&P 500 futures for generally leading the pullback in U.S. stock futures across the board. S&P 500 futures neared all-time highs of 2,193 earlier Monday, then backed off.

"There have been some strong rallies over the last three or four sessions, with the S&P 500 nearly hitting an all-time high. The Dow is already at its record highs ... we may see further gains, though, because people are very optimistic," Erlam said.

European stocks were also paring earlier gains, with the Stoxx Europe 600 index up just 0.2%, after opening up 0.8%. Asian stocks had a mixed day, with the Hong Kong Hang Seng Index dropping 1.4%, while the Nikkei 225 index rose 1.7% on a weak yen.

Gold was trading marginally higher, while oil prices fell.

Bond rout carries on, dollar soars

The yield on the U.S. 10-year Treasury bond tapped as high as 2.29%, trading at the highest level since early January. The 30-year bond yield moved above 3%, also the highest since January. The yield on the two-year Treasury note moved above 1% for the first time in about a year.

Bonds have been suffering on the view that while Trump's policies could be good for growth, they could also be inflationary, meaning the Federal Reserve may be forced to raise interest rates faster than markets expected. Mutual and exchange-traded funds benchmarked to the Bloomberg Barclays Aggregate U.S. Bond Index lost about $18 billion in value last week.

Investors will hear from Fed Chairwoman Janet Yellen this week as she testifies before Congress about the economic outlook, roughly a month before a Fed meeting, which many believe could deliver a U.S. interest-rate hike.

The dollar (http://www.marketwatch.com/story/dollar-hits-multi-month-highs-versus-euro-yen-loonie-2016-11-14) was continuing last week's strong performance, hitting multimonth highs against the euro, yen and Canadian dollar on Monday. The ICE Dollar index , which measures the dollar's strength against six of its biggest rivals, rose to 99.805 from 99.055 late Friday, trading roughly at the highest level in about a year, according to FactSet.

Economic docket: There is no major economic data on Monday's calendar, but there is a lineup of Fed speakers.

Dallas Fed President Rob Kaplan will be heard in a discussion at the Wichita Falls Chamber of Commerce at 1:20 p.m. Eastern Time. Later in the afternoon, Richmond Fed President Jeffrey Lacker will appear on a panel discussion on fiscal policy and debt in Chestertown, Md. at 5 p.m. Eastern. Then San Francisco Fed President John Williams will speak on growing China trade and investment in San Francisco at 6:30 p.m. Eastern.

Stocks to watch:Siemens AG(SIE.XE) said Monday it has agreed to buy U.S.-based Mentor Graphics Corp.(MENT) in a merger deal worth $4.5 billion (http://www.marketwatch.com/story/siemens-agrees-to-buy-us-based-mentor-in-45-billion-deal-2016-11-14). Shares of Mentor rose nearly 19% in premarket.

Samsung Electronics Co.(005930.SE) said it would buy U.S. auto-parts supplier Harman International Industries Inc. (HAR) for $8 billion in an all-cash deal. Harman shares were up 24% in premarket trading.