Futures Pointing To Initial Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to move back to the downside after ending the previous session modestly higher.

Traders may look to cash in on some of the recent strength in the markets, although trading activity is likely to remain subdued following the choppy session on Monday.

The Federal Reserve’s monetary policy announcement on Wednesday is likely to keep some traders on the sidelines as they wait for more clues about the outlook for monetary policy.

While the Fed is expected to leave interest rates unchanged, traders will be paying close attention to any comments regarding the central bank’s asset purchase program.

Traders may also be reluctant to make significant moves ahead of the release of quarterly results from tech giants Alphabet (GOOGL), Microsoft (MSFT) and Apple (AAPL) after the close of today’s trading.

On the earnings front, shares of Tesla (TSLA) are seeing pre-market strength after the electric car maker reported second quarter results that exceeded analyst estimates.

3M (MM) and General Electric (GE) may also move to the upside after the conglomerates reported better than expected second quarter results.

Meanwhile, shares of UPS (UPS) may see initial weakness after the delivery giant reported second quarter earnings that beat estimates but weaker than expected domestic revenue.

Stocks showed a lack of direction throughout much of the trading day on Monday but managed to end the session modestly higher. With the uptick on the day, the major averages once again reached new record closing highs.

The major averages all finished the day in positive territory, although the Nasdaq inched up just 3.72 points or less than a tenth of a percent to 14,840.71. The Dow rose 82.76 points or 0.2 percent to 35,144.31 and the S&P 500 edged up 10.53 points or 0.2 percent to 4,422.30.

The choppy trading seen for most of the day came as traders took a breather following the substantial rebound seen over the course of the previous week.

The rally represented a remarkable turnaround for the markets following the sell-off last Monday, which dragged the major averages down to their lowest closing levels in almost a month.

Upbeat earnings news contributed to rebound along with continued optimism about the economy despite some concerns about the spread of new coronavirus variants.

Traders may also have been reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

Traders are also likely to keep an eye on some key U.S. economic data, including reports on durable goods orders, consumer confidence, second quarter GDP and personal income and spending.

The Commerce Department released a report this morning unexpectedly showing another steep drop in new home sales in the month of June.

The report said new home sales tumbled by 6.6 percent to an annual rate of 676,000 in June after plunging by 7.8 percent to a revised rate of 724,000 in May.

The continued nosedive surprised economists, who had expected new home sales to jump by 4.0 percent to an annual rate of 800,000 from the 769,000 originally reported for the previous month.

With the unexpected decrease, new home sales slumped to their lowest annual rate since hitting 582,000 in April of last year.

Earnings news may also attract attention this week, with a slew of big-name companies due to report their quarterly results.

Airline stocks moved sharply higher over the course of the session, resulting in a 3.4 percent spike by the NYSE Arca Airline Index.

Significant strength was also visible among steel stocks, as reflected by the 3.3 percent jump by the NYSE Arca Steel Index. The index ended the session at its best closing level in over a month.

Energy stocks also saw considerable strength on the day even though the price of crude oil closed modestly lower.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 3.2 percent, the NYSE Arca Oil Index surged up by 2.4 percent and the NYSE Arca Natural Gas Index advanced by 2.2 percent.

Gold stocks also turned in a strong performance despite a decrease by the price of the precious metal, while biotechnology stocks showed a notable move to the downside.

Commodity, Currency Markets

Crude oil futures are edging down $0.06 to $71.85 a barrel after slipping $0.16 to $71.91 a barrel on Monday. Meanwhile, after dipping $2.60 to $1,799.20 an ounce in the previous session, gold futures are rising $5.30 to $1,804.50 an ounce.

On the currency front, the U.S. dollar is trading at 109.99 yen compared to the 110.39 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1814 compared to yesterday’s $1.1803.

Asia

Asian stocks ended mixed on Tuesday as a sell-off deepened in some of China’s most vibrant sectors and investors awaited the outcome of this week’s Federal Reserve meeting for any new hints about when the U.S. central bank would pare back stimulus.

U.S. earnings also remained on investors’ radar, with tech giants Apple, Microsoft, Amazon and Google parent Alphabet all reporting their quarterly results this week.

Chinese stocks fell sharply to extend losses from the previous session as concerns about Beijing’s clampdown on education tech firms and its property market weighed.

The benchmark Shanghai Composite Index ended down 86.26 points, or 2.5 percent, at 3,381.18 after spending much of the morning in positive territory. Hong Kong’s Hang Seng Index plunged 1,105.89 points, or 4.2 percent, to 25,086.43.

Japanese shares advanced as investors cheered upbeat earnings from corporate America. The Nikkei 225 Index rose 136.93 points, or 0.5 percent, to 27,970.22 but failed to close above the key 28,000 level for a second straight session. The broader Topix closed 0.6 percent higher at 1,938.04.

Airlines rallied the most, with both Japan Airlines and ANA Holdings climbing around 3.3 percent. Sumitomo Metal Mining surged 4.5 percent and Nippon Suisan Kaisha gained 4 percent. Rakuten Group plunged 7.3 percent after a ratings downgrade.

Australian markets eked out modest gains, as firm commodity prices helped lift mining and energy stocks. The benchmark S&P/ASX 200 Index hit another record high before ending the session up 37.10 points, or half a percent, at 7,431.40.

The broader All Ordinaries Index rose 33.50 points, or 0.4 percent, to 7,704 as Victoria State looked set to ease its COVID-19 lockdown restrictions as planned beginning Tuesday night.

Mining heavyweights BHP and Rio Tinto jumped 2.8 percent and 1.8 percent, respectively after iron ore and copper prices rose overnight. OZ Minerals soared 6.5 percent after raising its annual gold output forecast.

BlueScope jumped 6.4 percent after the steel manufacturer said it expects to beat its second half guidance. Santos and Woodside Petroleum rose 1-2 percent as oil prices inched up in Asian trading on expectations of tight supply.

Oil Search dropped half a percent after reporting a decline in oil and gas production in the June quarter. Tech stocks lost ground, with Afterpay, Appen and Xero falling 2-3 percent.

Seoul stocks rebounded on the back of positive economic data and optimism for strong earnings growth. South Korea’s daily new coronavirus cases stayed in the 1,300s for the second straight day, fueling hopes for a recovery in the economy and corporate earnings.

The Kospi edged up 7.58 points, or 0.2 percent, to 3,232.53. Pharmaceutical giant Samsung Biologics rose 1.6 percent and leading chemical firm LG Chem rallied 2.2 percent.

South Korea’s GDP climbed a seasonally adjusted 0.7 percent sequentially in the second quarter of 2021, the Bank of Korea said in an advance estimate. That was in line with expectations following the 1.7 percent growth in the previous three months.

Europe

European stocks have fallen on Tuesday as Beijing widened a clampdown on businesses it blames for exacerbating inequality and increasing financial risk.

Investors fled Chinese tech stocks, bonds and currencies amid concerns over Beijing’s sweeping crackdown on companies ranging from education firms to the technology sector.

While the German DAX Index has slid by 0.6 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.5 percent.

Miners Antofagasta and Glencore have moved to the downside after data showed China’s industrial profit growth moderated in June.

Industrial profits increased by 20 percent on a yearly basis in June, slower than the 36.4 percent growth posted in May, as high commodity prices continued to squeeze the profitability of companies.

Rio Tinto has also declined after saying it planned to cut production at its aluminium smelter in Canada due to union strikes.

Reckitt Benckiser shares have plummeted after the Lysol maker swung to a pre-tax loss for the first half of the year on lower revenue and higher costs.

Online greeting card publisher Moonpig has also slumped after saying it expects a major drop in sales in the coming months.

On the other hand, Daily Mirror publisher Reach Plc has jumped. The company said it was trading ahead of expectations and expects that strong momentum to continue.

Dutch telecom KPN has also advanced. The company announced a share buyback program worth 200 million euros ($235 million) after posting second quarter earnings above estimates.

U.S. Economic Reports

While a report released by the Commerce Department on Tuesday showed new orders for U.S. manufactured durable goods saw continued growth in the month of June, the increase came in well below expectations.

The report said durable goods orders climbed by 0.8 percent in June after spiking by an upwardly revised 3.2 percent in May.

Economists had been expecting orders to surge up by 2.1 percent compared to the 2.3 percent jump that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders rose by 0.3 percent in June following a 0.5 percent increase in May. Ex-transportation orders were expected to climb by 0.8 percent.

At 9 am ET, Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of May.

The Conference Board is due to release its report on consumer confidence in the month of July at 10 am ET. The consumer confidence index is expected to drop to 124.9 in July from 127.3 in June.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $61 billion worth of five-year notes.

Stocks In Focus

Shares of F5 Networks (FFIV) are moving sharply higher in pre-market trading after the networking company reported fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines.

Hospital operator Universal Health Services (UHS) is also likely to see initial strength after reporting better than expected second quarter results and providing upbeat guidance.

On the other hand, shares of Sherwin-Williams (SHW) may move to the downside after the paint company reported second quarter earnings that missed analyst estimates.