Uncertainty May Lead To Choppy Trading On Wall Street

Uncertainty May Lead To Choppy Trading On Wall Street

The major U.S. index futures are pointing to a roughly flat opening on Tuesday, with stocks likely to show a lack of direction after ending the previous session mostly higher.

Traders may be reluctant to make significant moves following the strength seen on Monday, which lifted the tech-heavy Nasdaq to a record closing high.

An upcoming G-7 summit in Canada as well as the planned meeting between President Donald Trump and North Korean leader Kim Jong Un next week may also keep some traders on the sidelines.

After moving to the upside early in the session, stocks remained mostly positive throughout the trading day on Monday. With the upward move on the day, the Nasdaq reached a new record closing high.

The major averages all closed firmly in positive territory. The Dow advanced 178.48 points or 0.7 percent to 24,813.69, the Nasdaq climbed 52.13 points or 0.7 percent to 7,606.46 and the S&P 500 rose 12.25 points or 0.5 percent to 2,746.87.

The strength on Wall Street came as traders continued to react positively to the release of better than expected employment data last Friday.

The Labor Department said non-farm payroll employment surged up by 223,000 jobs in May after climbing by a downwardly revised 159,000 jobs in April.

Economists had expected employment to increase by 188,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.

With the stronger than expected job growth, the unemployment rate edged down to 3.8 percent in May from 3.9 percent in April. The unemployment rate had been expected to come in unchanged.

The modest decrease pulled the unemployment rate down to its lowest level since a matching rate in April of 2000.

Meanwhile, traders have largely shrugged off a report from the Commerce Department showing a bigger than expected pullback in factory orders in the month of April.

The Commerce Department said factory orders fell by 0.8 percent in April after spiking by an upwardly revised 1.7 percent in March.

Economists had expected factory orders to drop by 0.5 percent compared to the 1.6 percent jump originally reported for the previous month.

Retail stocks turned in some of the market’s best performances on the day, driving the Dow Jones Retail Index up by 1.7 percent.

Tobacco and real estate stocks also moved to the upside, while weakness was visible among natural gas and gold stocks.

Commodity, Currency Markets

Crude oil futures are sliding $0.37 to $64.38 a barrel after tumbling $1.06 to $64.75 a barrel on Monday. Meanwhile, after falling $2 to $1,297.30 an ounce in the previous session, gold futures are edging down $0.60 to $1,296.70 an ounce.

On the currency front, the U.S. dollar is trading at 109.69 yen compared to the 109.82 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1672 compared to yesterday’s $1.1699.

Asia

Asian stocks ended on a mixed note Tuesday as weak commodity prices pulled down resource stocks and investors waited for cues from the G-7 summit in Canada later this week as well the June 12th summit in Singapore between U.S. President Donald Trump and North Korean leader Kim Jong Un.

Gold held steady after three sessions of declines and the dollar held near a two-week high against the yen, while oil edged higher after falling nearly 2 percent in the previous session on concerns over growing U.S. production and expectations of higher OPEC supplies.

Chinese shares rose after data showed activity in China’s service sector expanded at a steady pace in May. The Caixin Services PMI stood at 52.9, matching expectations and unchanged from the previous month. The benchmark Shanghai Composite Index gained 23.22 points or 0.8 percent to end at 3,114.41.

Hong Kong’s Hang Seng Index rose 95.47 points or 0.3 percent to 31,093.45 despite the Nikkei PMI score for the private sector coming in at 47.8 in May, down from 49.1 in April.

Japanese shares eked out modest gains as the yen edged lower against the dollar and data on service sector activity and household spending painted a mixed picture of the economy. The Nikkei 225 Index inched up 63.60 points or 0.3 percent to 22,539.54, while the broader Topix Index finished marginally higher at 1,774.96.

Tech shares followed their U.S. peers higher, with Tokyo Electron and Advantest ending up more than 1 percent each. Japan Communications soared 7.3 percent after Japan’s financial watchdog said it would support a fintech experiment project by a consortium including the company.

Sharp Corp. lost 4.1 percent on reports that it is in talks to finalize a deal to buy Toshiba Corp’s personal computer business for around 5 billion yen.

Meanwhile, Australian shares closed lower as iron ore and oil prices fell and the Reserve Bank of Australia left interest rates unchanged at a historic low of 1.5 percent for the 20th consecutive meeting, citing sluggish wage growth and tepid inflation.

The service sector in Australia continued to expand in May and at an accelerated pace, the latest survey from the Australian Industry Group revealed with a Performance of Service Index score of 59.0, up from 55.2 in April.

The benchmark S&P/ASX 200 Index dropped 30.60 points or 0.5 percent to 5,994.90, while the All Ordinaries Index ended down 30.10 points or 0.5 percent at 6,108.50.

Commonwealth Bank rose 1 percent to extend Monday’s gains after settling a civil lawsuit. The other three big banks fell between 0.1 percent and 0.3 percent.

The overnight fall in oil prices weighed on the energy sector, with Oil Search, Santos and Origin Energy losing 1-2 percent. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group dropped more than 1 percent each.

Europe

European markets are broadly higher on Tuesday, even as U.K. stocks slipped into the red, hit by a stronger pound after the latest IHS Markit services data showed that British service sector activity expanded at the fastest pace in three months in May.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index rose to 54.0 in May from 52.8 in April.

Elsewhere, Eurozone private sector expanded at the slowest pace in one-and-a-half years, as initially estimated in May, final data from IHS Markit showed.

The composite output index dropped to 54.1 from 55.1 in April, in line with the flash reading of 54.1. This was the lowest score since November of 2016.

Investors looked ahead to the G-7 summit in Canada later this week as well the June 12th summit in Singapore between U.S. President Donald Trump and North Korean leader Kim Jong Un.

The pan-European Stoxx Europe 600 index is up 0.3 percent after rising 0.3 percent in the previous session.

While the U.K.’s FTSE 100 Index is down by 0.5 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 1.1 percent.

French bank Societe Generale has advanced after announcing the sale of its entire stake in Self Trade Bank.

Philips Electronics NV shares have also moved higher. The Dutch consumer electronics giant announced that it has signed an agreement to acquire EPD Solutions for an upfront cash consideration of 250 million euros and deferred milestone dependent payments.

Italian offshore engineering contractor Saipem has rallied after an upgrade from Morgan Stanley.

On the other hand, Royal Bank of Scotland Group has tumbled after the U.K. government said it would cut its holding in the bank to 62.4 percent from 70.1 percent.

U.S. Economic Reports

At 10 am ET, the Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of May.

The ISM’s non-manufacturing index is expected to edge up to 57.5 in May from 56.8 in April, with a reading above 50 indicating growth in the service sector.

Stocks In Focus

Shares of Mylan (MYL) are moving significantly higher in pre-market trading after announcing the FDA has approved its Fulphila, a biosimilar to Neulasta co-developed with Biocon.

Social media giant Twitter (TWTR) is also likely to see early strength on news the company’s stock will replace Monsanto (MON) in the S&P 500.

On the other hand, shares of Take-Two Interactive (TTWO) may move to the downside after BMO Capital Markets downgraded the video game company’s stock to Market Perform from Outperform.

Coffee giant Starbucks (SBUX) is also seeing pre-market weakness on news Howard Schultz is stepping down as executive chairman, effective June 26th.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

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