The major U.S. index futures are pointing to a higher opening on Tuesday, with stocks likely to regain some ground following the sell-off seen in the previous session.
The markets may benefit from bargain hunting, as traders pick up stocks at reduced levels after the steep losses posted on Monday.
While the markets may show an initial rebound, trading activity may be somewhat subdued amid a quiet day on the U.S. economic front.
Traders may look ahead to the release of the closely watched monthly jobs report on Friday as well as reports on private sector employment, factory orders, service sector activity and international trade due in the coming days.
Stocks moved sharply lower over the course of the trading session on Monday as traders returned to their desks following the long holiday weekend. The major averages all showed notable moves to the downside, with the Nasdaq and the S&P 500 falling to their lowest closing levels in almost two months.
The major averages climbed off their lows of the session going into the close but still ended the day firmly in the red. The Dow slumped 458.92 points or 1.9 percent to 23,644.19, the Nasdaq plunged 193.33 points or 2.7 percent to 6,870.12 and the S&P 500 tumbled 58.99 points or 2.2 percent to 2,581.88.
The sell-off on Wall Street came after China announced it is imposing tariffs on 128 imported goods originating in the U.S.
The move by China was in response to President Donald Trump’s decision to impose tariffs on steel and aluminum imports.
China revealed it is imposing a 15 percent tariff on 120 American products such as fruits, nuts, wine and steel pipes and a 25 percent tariff on eight other products, including pork and scrap aluminum.
The decision by China has added to recent concerns about a potential trade war after Trump also announced plans to impose about $50 billion of tariffs on Chinese goods over intellectual-property violations.
A notable decline by Amazon (AMZN) also weighed on the markets after Trump once again attacked the online retail giant on Twitter.
“Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed,” Trump tweeted. “Also, our fully tax paying retailers are closing stores all over the country…not a level playing field!”
On the U.S. economic front, the Institute for Supply Management released a report showing activity in the manufacturing sector grew at a slower than expected rate in the month of March.
The ISM said its purchasing managers index fell to 59.3 in March from 60.8 in February, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.0.
A separate report from the Commerce Department showed construction spending rose by much less than expected in February.
Biotechnology stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Biotechnology Index down by 4.9 percent. With the drop, the index ended the session at its lowest closing level in nearly three months.
Within the biotech sector, Alkermes (ALKS) posted a steep loss after the FDA rejected the biopharmaceutical company’s application for approval of an experimental depression treatment.
Significant weakness was also visible among retail stocks, as reflected by the 3.7 percent loss posted by the Dow Jones Retail Index. The steep decline by shares of Amazon weighed on the sector.
Energy stocks also saw considerable weakness, moving lower along with the price of crude oil. Semiconductor, telecom, housing, and computer hardware stocks also showed notable moves to the downside, reflecting broad based weakness on Wall Street.
Meanwhile, gold stocks were among the few groups to buck the downtrend, with the NYSE Arca Gold Bugs Index climbing by 1.3 percent. The strength among gold stocks came amid a sharp increase by the price of the precious metal.
Commodity, Currency Markets
Crude oil futures are rising $0.21 to $63.22 a barrel after plunging $1.93 to $63.01 a barrel on Monday. Meanwhile, after spiking $19.60 to $1,346.90 an ounce in the previous session, gold futures are falling $3.40 to $1,343.50 an ounce.
On the currency front, the U.S. dollar is trading at 106.26 yen compared to the 105.89 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2298 compared to yesterday’s $1.2302.
Asian stocks ended mostly lower on Tuesday and safe-haven assets such as gold and the yen rose as renewed trade tensions, a sharp drop in crude oil prices and another sell-off in U.S. technology stocks rattled investors.
China’s Shanghai Composite Index fell 26.74 points or 0.9 percent to 3,136.44 on concerns that the Chinese retaliatory tariffs could dampen market confidence and hurt economic growth. Meanwhile, Hong Kong’s Hang Seng Index rose 86.72 points or 0.3 percent to 30,180.10.
Japanese shares closed lower, dragged down by exporters and technology stocks. The Nikkei 225 Index dropped 96.29 points or 0.5 percent to 21,292.29, while the broader Topix index closed 0.3 percent lower at 1,703.80.
Tech stocks Tokyo Electron, TDK Corp and Advantest lost 1-3 percent after U.S. President Donald Trump attacked Amazon for a second time in three days over the pricing of its deliveries through the United States Postal Service. A stronger yen weighed on exporters, with Canon and Panasonic ending down over 1 percent.
On the other hand, online broker Monex Group jumped over 23 percent after the company confirmed it was considering buying local cryptocurrency exchange Coincheck.
Australian shares fell modestly as the Reserve Bank of Australia left its key interest rate unchanged at a record low, as widely expected, saying the low level of interest rates is continuing to support the economy.
The benchmark S&P/ASX 200 Index edged down 7.50 points or 0.1 percent to 5,751.90, extending losses for a third straight session. The broader All Ordinaries Index dipped 0.2 percent to finish at 5,859.10.
Banks ended mixed, with ANZ losing 1.2 percent and NAB closing down 0.2 percent. Mining heavyweights BHP Billiton and Rio Tinto climbed around 2 percent as base metal prices gained.
Gold miner Newcrest Mining rallied 2.3 percent after the company said it has resumed processing at its Cadia goldmine. Energy major Santos soared more than 16 percent on a sweetened takeover offer from Harbour Energy.
European stocks have moved to the downside on Tuesday, with rising trade tensions between the U.S. and China as well as a fresh sell-off in U.S. tech stocks weighing on the markets.
While the U.K.’s FTSE 100 Index is just below the unchanged line, the French CAC 40 Index is down by 0.3 percent and the German DAX Index is down by 0.5 percent.
The day’s economic reports have also disappointed investors. German retail fell unexpectedly sales by 0.7 percent in February, bigger than the 0.3 percent decrease seen in January, Destatis reported. This was the third consecutive decline in sales.
Final data from IHS Markit showed euro area manufacturing activity grew at the slowest pace in eight months in March. The final manufacturing Purchasing Managers’ index fell to 56.6 in March from 58.6 in February.
U.K. manufacturing output growth picked up in March, but this was offset by slower increases in both new orders and employment, according to survey results from IHS Markit.
Swiss bank UBS Group has fallen after proposing new members to its board. Eurofins Scientific has also moved to the downside after acquiring Lab Frontier in South Korea.
Air France has plunged as its workers have gone on strike over a pay dispute. French food services group Sodexo has also come under pressure after Goldman Sachs lowered its rating on the stock.
Meanwhile, Petrofac has rallied after winning an engineering, procurement, and construction contract from Vedanta worth about $233 million.
U.S. Economic Reports
At 9:30 am ET, Minneapolis Federal Reserve President Neel Kashkari is due to participate in a moderated Q&A at the Regional Economic Indicators Forum in Duluth, Minnesota.
Stocks In Focus
Shares of Overstock.com (OSTK) are moving notably higher in pre-market trading after the online retailer announced it is terminating a proposed public stock offering due to recent market volatility.
Oilfield services company Schlumberger (SLB) may also see early strength after SunTrust Robinson Humphrey upgraded its rating on the company’s stock to Buy from Hold.
On the other hand, shares of Constellation Brands (STZ) may move to the downside after Stifel Nicolaus downgraded its rating on the spirit maker’s stock to Hold from Buy.
Video game retailer GameStop (GME) may also see initial weakness after being downgraded to Hold from Buy at Loop Capital Markets.
by RTTNews Staff Writer
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