The major U.S. index futures are pointing to a modestly lower opening on Tuesday, with stocks likely to add to the losses posted in the previous session.
Concerns about the outlook for interest rates may weigh on the markets ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement for clues about the outlook for rates.
Traders may also be reluctant to pick up stocks ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
After failing to sustain an initial upward move, stocks moved mostly lower over the course of the trading session on Monday. The major averages pulled back into negative territory following the mixed performance seen last Friday.
Going into the close, the major averages saw further downside, ending the session firmly in the red. The Dow fell 148.04 points or 0.6 percent to 24,163.15, the Nasdaq slid 53.53 points or 0.8 percent to 7,066.27 and the S&P 500 slumped 21.86 points or 0.8 percent to 2,648.05.
The lower close on Wall Street came as traders looked ahead to several key events later this week, including the Federal Reserve’s monetary policy announcement on Wednesday.
On the U.S. economic front, the Commerce Department released a report showing personal income increased by slightly less than expected in the month of March.
The report said personal income rose by 0.3 percent in March, matching the downwardly revised increase in February. Economists had expected income to climb by 0.4 percent.
Meanwhile, the Commerce Department said personal spending climbed by 0.4 percent in March after coming in unchanged in the previous month. The increase in spending matched economist estimates.
A separate report from the National Association of Realtors showed pending home sales increased by less than expected in the month of March.
NAR said its pending home sales index rose by 0.4 percent to 107.6 in March from a downwardly revised 107.2 in February. Economists had expected pending home sales to climb by 0.9 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Gold stocks showed a significant move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 2 percent. The weakness among gold stocks came amid a decrease by the price of the precious metal.
Considerable weakness was also visible among housing stocks, as reflected by the 1.7 percent drop by the Philadelphia Housing Sector Index. With the decrease, the index ended the session at its lowest closing level in six months.
Telecom, biotechnology, and computer hardware stocks also saw notable weakness, moving lower along with most of the other major sectors.
Commodity, Currency Markets
Crude oil futures are sliding $0.65 to $67.92 a barrel after rising $0.47 to $68.57 a barrel on Monday. Meanwhile, after falling $4.20 to $1,319.20 an ounce in the previous session, gold futures are slumping $8.80 to $1,310.40 an ounce.
On the currency front, the U.S. dollar is trading at 109.61 yen compared to the 109.34 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2034 compared to yesterday’s $1.2078.
Many of the major Asian markets were closed for Labor Day on Tuesday, although stocks in Australia and Japan moved higher in light trading.
Investor sentiment was bolstered by news that the U.S. has extended the May 1st deadline on steel and aluminum tariff exemptions for the European Union, Canada and Mexico by a month.
In Australia, the S&P/ASX 200 Index climbed 32.50 points or 0.5 percent to 6,015.20, while the All Ordinaries Index rose 28.40 points or 0.5 percent to 6,100.00.
The higher close by Australian stocks came after Australia’s central bank decided to leave its key interest rate unchanged at a record low, as slow employment growth and housing market activity provided more space to maintain the status quo.
The board of the Reserve Bank of Australia, governed by Philip Lowe, maintained the cash rate at 1.50 percent. The bank reduced the rate by 25-basis points each in August and May of last year.
“Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,” the bank said in a statement.
Japanese stocks also saw modest strength on the day, with the Nikkei 225 Index edging up 40.16 points or 0.2 percent to 22,508.03.
U.K. stocks have moved to the upside during trading on Tuesday, while most of the other major European markets are closed for Labor Day. The U.K.’s FTSE 100 Index is rising by 0.5 percent.
Shares of oil company BP PLC have moved higher after the company reported its best quarterly performance in almost four years, thanks to rising oil prices and increased production.
According to a report from IHS Markit, the Markit/Chartered Institute of Procurement & Supply factory Purchasing Managers’ Index fell to 53.9 in April from 54.9 in March. Nonetheless, the indicator signaled expansion in each of the past 21 months.
On the price front, the rate of input price inflation faced by U.K. manufacturers remained elevated in April, despite easing to a nine-month low, the report said. Meanwhile, the rate of output charge inflation eased for the third straight month to the slowest since August 2017.
U.S. Economic Reports
At 10 am ET, the Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of April.
The ISM’s purchasing managers index is expected to dip to 58.3 in April from 59.3 in March, although a reading above 50 would still indicate growth in the manufacturing sector.
The Commerce Department is also due to release its report on construction spending in the month of March at 10 am ET. Construction spending is expected to rise by 0.5 percent.
Stocks In Focus
Shares of Akamai Technologies (AKAM) are moving notably higher in pre-market trading after the provider of internet content delivery technology reported better than expected first quarter results.
Hospital operator Tenet Healthcare (THC) may also see early strength after reporting first quarter results that exceeded estimates and raising its full-year guidance.
Meanwhile, shares of Pfizer (PFE) are moving lower in pre-market trading after the drug maker reported better than expected first quarter earnings but weaker than expected sales.
Machine vision technology maker Cognex (CGNX) may also come under pressure after reporting first quarter earnings that beat estimates but providing disappointing full-year guidance.
by RTTNews Staff Writer
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