U.S. Stocks May Show A Lack Of Direction In Early Trading

After moving sharply higher over the two previous sessions, stocks may show a lack of direction in early trading on Tuesday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 4 points.

Traders may be reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 153,000 jobs in January after rising by 199,000 jobs in December. The unemployment rate is expected to hold at 3.9 percent.

The strength of the monthly jobs data could impact expectations regarding how fast the Federal Reserve will raise rates from near-zero levels in an effort to fight inflation.

Payroll processor ADP’s report on private sector employment will provide an early look at the strength of the labor market on Wednesday.

Among individual stocks, shares of UPS (UPS) are moving sharply higher in pre-market trading after the delivery giant reported better than expected fourth quarter results, provided upbeat guidance and raised its dividend.

Energy giant ExxonMobil (XOM) may also move to the upside after reporting fourth quarter earnings that beat analyst estimates and announcing a new $10 billion share repurchase program.

Meanwhile, shares of AT&T (T) may come under pressure after the telecom giant announced plans to spin off its interest in WarnerMedia in connection with the media and entertainment company’s merger with Discovery (DISCA). AT&T subsequently plans to cut its annual dividend nearly in half.

Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of January.

The ISM’s manufacturing PMI is expected to dip to 57.5 in January from 58.7 in December, although a reading above 50 would still indicate growth.

The Commerce Department is also due to release its report on construction spending in the month of December. Construction spending is expected to increase by 0.6 percent.

Additionally, the Labor Department is also scheduled to release the results of its Job Openings and Labor Turnover Survey for December. Job openings are expected to edge down to 10.3 million.

Stocks moved sharply higher over the course of the trading day on Monday, extending the rally seen during trading last Friday. Tech stocks helped lead the continued advance on Wall Street, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages all posted notable gains, although the Nasdaq still outperformed its counterparts. While the Nasdaq soared 469.31 points or 3.4 percent to 14,239.88, the Dow jumped 406.39 points or 1.2 percent to 35,131.86 and the S&P 500 surged 83.70 points or 1.9 percent to 4,515.55.

Despite the strong upward move seen over the last two sessions of January, the major averages posted steep losses for the first month of the year. The Nasdaq and the S&P 500 plunged by 8.9 percent and 5.2 percent, respectively, recording their worst months since March of 2020.

In overseas trading, stock markets across the Asia-Pacific region moved higher on Tuesday, although several major markets were closed for Chinese New Year. Japan’s Nikkei 225 Index rose by 0.3 percent, while Australia’s S&P/ASX 200 Index climbed by 0.5 percent.

The major European markets have also moved to the upside on the day. While the U.K.’s FTSE 100 Index has jumped by 1.1 percent, the French CAC 40 Index and the German DAX Index are both up by 1.3 percent.

In commodities trading, crude oil futures are falling $0.47 to $87.68 a barrel after jumping $1.33 to $88.15 a barrel on Monday. Meanwhile, after climbing $9.80 to $1,796.40 an ounce in the previous session, gold futures are rising $7.80 to $1,804.20 an ounce.

On the currency front, the U.S. dollar is trading at 114.73 yen compared to the 115.11 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1255 compared to yesterday’s $1.1235.

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