Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction following yesterday’s sell-off.

Traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets following the steep drop seen on Monday.

While some traders are likely to pick up stocks at reduced levels, worries about further downside may keep buying interest subdued.

The continued surge in oil prices also continues to weigh on investors’ minds, with NBC News reporting the U.S. could announce a ban on Russian oil imports as early as today.

Gas stations are raising prices along with the spike in oil futures, as AAA has said the average price for a gallon of gas has reached a record high of $4.173.

The national average gas price is up by nearly $0.11 a gallon from just yesterday and up more than $0.55 a gallon from a week ago.

Stocks moved sharply lower over the course of the trading day on Monday, extending the downward move seen to close out the previous week. The major averages all showed substantial moves to the downside on the day.

The major averages saw further downside going into the close, ending the session at their worst levels of the session. The Dow plunged 797.42 points or 2.4 percent to 32,817.38, the Nasdaq plummeted 482.48 points or 3.6 percent to 12,830.96 and the S&P 500 tumbled 127.78 points or 3 percent to 4,201.09.

With the steep drop on the day, the Nasdaq ended the session at its lowest closing level in a year, while the Dow and the S&P 500 dropped to eleven and eight-month closing lows, respectively.

Concerns about the impact of the recent surge in oil prices contributed to the sell-off on Wall Street, with crude for April delivery spiking as high as $130.50 a barrel overnight.

The price of crude oil subsequently gave some ground after reaching its highest level since July 2008 but still jumped $3.72 to $119.40 a barrel.

The continued jump in oil prices comes as Secretary of State Antony Blinken said on NBC’s “Meet the Press” on Sunday that the U.S. and European partners are in “active discussions” about banning the import of Russian oil in response to the country’s invasion of Ukraine.

The subsequent surge in gas prices is likely to weigh on consumers, who are already grappling with higher prices due to elevated inflation.

This all comes as the Federal Reserve prepares to raise interest rates by at least a quarter point at its monetary policy meeting next week.

Airline stocks turned in some of the market’s worst performances on the day amid concerns about higher fuel costs, with the NYSE Arca Airline Index plummeting by 13.3 percent to its lowest closing level in well over a year.

Substantial weakness was also visible among housing stocks, as reflected by the 5.2 percent nosedive by the Philadelphia Housing Sector Index.

Semiconductor stocks also showed a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 4.9 percent.

Financial, tobacco, chemical and retail stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Meanwhile, oil service stocks bucked the downtrend amid the continued jump in oil prices, resulting in an 8.6 percent spike by the Philadelphia Oil Service Index.

Commodity, Currency Markets

Crude oil futures are spiking $4.62 to $124.02 a barrel after surging $3.72 to $119.40 a barrel on Monday. Meanwhile, after jumping $29.30 to $1,995.90 an ounce in the previous session, gold futures are climbing $22.90 to $2,018.80 an ounce.

On the currency front, the U.S. dollar is trading at 115.75 yen compared to the 115.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0891 compared to yesterday’s $1.0854.

Asia

Asian stocks fell broadly on Tuesday amid worries about inflation and a mounting risk of a global economic slowdown – often called stagflation.

There was no major progress in the peace talks between Ukraine and Russia and oil prices rose about 2 percent in Asian trading, weighing on sentiment.

Chinese stocks tumbled amid concerns over inflation, risks from the Russia-Ukraine war and rising Covid-19 cases in mainland China and Hong Kong.

The benchmark Shanghai Composite Index plunged 79.33 points, or 2.4 percent, to 3,293.53, while Hong Kong’s Hang Seng Index slumped 291.76 points, or 1.4 percent, to 20,765.87.

Japanese shares hit a 16-month low amid worries that higher input costs may weigh on profit margins in the near term. The Nikkei 225 Index fell 430.46 points, or 1.7 percent, to 24,790.95, its lowest close since November 6, 2020. The broader Topix ended 1.9 percent lower at 1,759.86.

Hino Motors led the losses to end down more than 12 percent, while heavyweight SoftBank Group plunged 5 percent and Uniqlo operator Fast Retailing declined 2.7 percent. Banks Sumitomo Mitsui Financial, Mitsubishi UFJ Financial and Mizuho Financial gave up 3-5 percent.

Australian markets ended notably lower despite upbeat business sentiment numbers from National Australia Bank. Mining and energy stocks fell on profit taking as surging commodity prices fanned fears of runaway inflation, slowing economic growth and pressure on corporate earnings.

The benchmark S&P/ASX 200 Index shed 58.30 points, or 0.8 percent, to close at 6,980.30, while the broader All Ordinaries Index closed 0.9 percent lower at 7,252.90.

Mining heavyweights BHP and Rio Tinto ended down 3.7 percent and 4.3 percent, respectively. In the energy sector, Woodside Petroleum, Santos and Beach Energy all fell around 4 percent.

Seoul stocks ended lower for a third straight session on concerns that Russia’s invasion of Ukraine may hamper the post-pandemic economic recovery. The Kospi slid 28.91 points, or 1.1 percent, to close at 2,622.40. Samsung Electronics, SK Hynix, LG Chem and POSCO gave up 1-3 percent.

Europe

European stocks have rebounded on Tuesday, bond yields turned positive and the euro rose after reports that the European Union is mulling a joint-bond sale to fund energy and defense spending.

The European Union will unveil a plan as soon as this week to jointly issue bonds on a potentially massive scale to finance energy and defense spending as the bloc copes with the fallout from Russia’s invasion of Ukraine, Bloomberg reported.

As commodity prices soar, investors eye U.S. consumer inflation data due Thursday for additional clues about the pace of the Federal Reserve’s monetary tightening.

While the French CAC 40 Index has jumped by 1 percent, the German DAX Index is up by 0.7 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

Banks have topped the gainers list, with Commerzbank, Deutsche Bank, BNP Paribas and Societe Generale moving sharply higher.

German energy generation and trading company Uniper has also shown a strong move to the upside after backing its financial outlook.

Automotive and industrial supplier Schaeffler has also spiked after reporting turnaround results for the fiscal year 2021.

M&G shares have also soared in London as the investment manager announced a £500 million share buyback program.

Unite Students has also advanced. The owner, manager and developer of student accommodation has sold a portfolio of 11 properties, comprising 4,488 beds for £306 million to an affiliate of Lone Star Funds.

Geotechnical specialist contractor Keller has also moved notably higher after reporting an increase in 2021 pretax profit.

British Land has also risen after the real estate investment trust announced a new joint venture with Melbourne-based pension fund AustralianSuper.

IWG has also jumped. After posting improved annual results, the flexible workspace provider announced the merger of its digital assets with The Instant Group.

Valneva SE has also advanced in Paris. The French biotech firm said that it has successfully completed the phase III pivotal trial of its single-shot Chikungunya vaccine candidate VLA1553.

In economic news, German industrial output advanced 2.7 percent month-on-month in January, faster than the revised 1.1 percent increase seen in December, Destatis reported. Production was forecast to climb at a slower pace of 0.5 percent.

On a yearly basis, industrial output grew 1.8 percent, in contrast to the 2.7 percent decline posted in the previous month.

U.K. retail sales logged another strong month of growth in February on higher demand for furniture and home accessories and clothing and footwear.

Like-for-like sales increased 2.7 percent on a yearly basis in February as restrictions were lifted, data from the British Retail Consortium and KPMG showed. At the same time, overall retail sales grew 6.7 percent.

U.S. Economic Reports

Reflecting a jump in imports and a steep drop in exports, the Commerce Department released a report on Tuesday showing the U.S. trade deficit widened by more than expected in the month of January.

The Commerce Department said the trade deficit widened to $89.7 billion in January from a revised $82.0 billion in December.

Economists had expected the deficit to climb to $87.1 billion from the $80.7 billion originally reported for the previous month. With the bigger than expected increase, the trade deficit reached a new record high.

The wider trade deficit came as the value of imports jumped by 1.2 percent to $314.1 billion, while the value of exports tumbled by 1.7 percent to $224.4 billion.

At 10 am ET, the Commerce Department is due to release its report on wholesale inventories in the month of January. Wholesale inventories are expected to increase by 0.8 percent.

The Treasury Department is scheduled to announce the results of this month’s auction of $48 billion worth of three-year notes at 1 pm ET.

Stocks In Focus

Shares of Dick’s Sporting Goods (DKS) are seeing significant pre-market strength after the sporting goods retailer reported fourth quarter results that beat analyst estimates on both the top and bottom lines.

Pet supplies retailer Petco Health and Wellness (WOOF) is also likely to move to the upside after reporting better than expected fourth quarter earnings.

Shares of Dish Network (DISH) may also see initial strength after UBS upgraded its rating on the telecom company to Buy from Neutral.