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

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 after ending the previous session mostly lower.

Traders may be reluctant to make significant moves ahead of the release of key inflation data in the coming days.

The inflation data could impact expectations regarding how aggressively the Federal Reserve will continue raising interest rates.

U.S. stocks closed lower on Monday, extending recent losses, as worries about interest rate hikes and slowing growth continued to weigh on sentiment.

Technology stocks fell on the Biden administration’s decision to impose export controls on China. Washington published a set of export controls that limit companies selling advanced computing semiconductors and manufacturing equipment to China.

The major averages all ended in negative territory. The Dow, which plunged nearly 300 points early on in the session, ended with a loss of 93.91 points or 0.3 percent at 29,202.88. The S&P 500 settled at 3,612.39, losing 27.27 points or 0.8 percent, while the Nasdaq ended with a loss of 110.30 points or 1.0 percent at 10,542.10, the lowest close in over 2 years.

Shares of Qualcomm Inc. fell more than 5 percent. Nvidia ended lower by about 4 percent, and Advanced Micro Devices shed about 1 percent. Micron Technology Inc. shares drifted down 2.89 percent.

Microsoft and Intel both shed more than 2 percent. Salesforce.com, Walt Disney and Chevron also ended sharply lower.

Walgreens Boots Alliance gained nearly 5 percent. Merck climbed 3.3 percent. Boeing, Amgen, 3M, McDonalds and Caterpillar posted sharp to moderate gains.

Data from the Labor Department last week added to interest rate concerns. The report showed non-farm payroll employment jumped by 263,000 jobs in September after surging by an unrevised 315,000 jobs in August and spiking by an upwardly revised 537,000 jobs in July. Economists had expected employment to leap by 250,000 jobs.

The slightly stronger than expected job growth reflected notable increases in employment in the leisure and hospitality and healthcare sectors, which added 83,000 jobs and 75,400 jobs, respectively.

Economists noted the job growth was even stronger excluding a drop in state and local government education payrolls, which reflected shifting seasonal patterns in teacher hiring.

The Labor Department also said the unemployment rate dipped to 3.5 percent in September from 3.7 percent in August, while economists expected the unemployment rate to come in unchanged.

U.S. inflation data, minutes from the Fed’s September meeting and reports on retail sales and consumer sentiment due this week will provide more insights into policymakers’ view of where inflation stands and the outlook for the future path of interest rates.

Commodity, Currency Markets

Crude oil futures are falling $1.03 to $90.10 a barrel after slumping $1.51 to $91.13 a barrel on Monday. Meanwhile, after tumbling $34.10 to $1,675.20 an ounce in the previous session, gold futures are inching up $2 to $1,677.20 an ounce.

On the currency front, the U.S. dollar is trading at 145.59 yen compared to the 145.72 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $0.9726 compared to yesterday’s $0.9702.

Asia

Asian stocks ended mostly lower on Tuesday to extend recent losses amid worries about relentless Federal Reserve tightening and the escalation of the conflict in Ukraine following heavy Russian attacks.

Technology stocks bore the brunt of the selling as the United States intensified efforts to hobble China’s semiconductor industry.

China’s Shanghai Composite index rose 0.19 percent to 2,979.79 as a strong outlook from COSCO Shipping Holdings Co Ltd and Contemporary Amperex Technology Co Ltd helped offset mounting economic woes.

The Taiwan Weighted Index, which is heavily exposed to Chinese chipmaking stocks, plummeted 4.4 percent to a near two-year low, while Hong Kong’s Hang Seng index fell 2.23 percent to 16,832.36.

Japanese shares lost ground on worries about aggressive policy tightening in the wake of hawkish signals from Federal Reserve Vice Chair Lael Brainard.

Brainard on Monday said the central bank has no intentions of a dovish pivot in the near-term, and the actual policy path will be data dependent.

The Nikkei average fell 2.64 percent to 26,401.25 as traders returned from a three-day holiday weekend. The broader Topix index ended 1.86 percent lower at 1,871.24, marking its worst day since Sept. 26.

Tech stocks led losses, with chipmaking equipment manufacturer Tokyo Electron falling 5.5 percent.

Nidec Corp, a manufacturer and distributor of electric motors, plummeted 9.3 percent on share buyback allegations. The company denied a report that said it had engaged in inappropriate handling of share buybacks.

South Korea’s tech heavy Kospi average tumbled 1.83 percent to 2,192.07 as traders returned to their desks after a holiday on Monday.

Hyundai Motor lost 4.3 percent and its affiliate Kia plunged 5.1 percent on concerns that their competitiveness could be seriously hurt by the U.S. Inflation Reduction Act that excludes electric vehicles assembled outside the U.S. from tax incentives.

Australian markets fell for a third day running, as oil extended overnight loses and a survey showed Australian consumer confidence fell to its lowest level since mid-August last week.

The benchmark S&P/ASX 200 dropped 0.34 percent to 6,645 while the broader All Ordinaries index closed 0.40 percent lower at 6,844.30.

Europe

European stocks fell for a fifth consecutive session on Tuesday as investors fretted about the impact of higher interest rates on corporate profits.

The U.S. efforts to hobble China’s semiconductor industry, an escalating conflict in Ukraine and China’s COVID woes also added to worries over a possible global recession.

The leaders of the G7 group of nations will hold a virtual meeting today to discuss offering further support to Ukraine after Moscow launched retaliatory missile strikes that killed 19 people.

German government bond yields held near 11-year highs after reports Chancellor Olaf Scholz was prepared to back European Union-wide joint debt issuance to help the bloc’s members tackle the energy crisis.

Meanwhile, to restore orderly market conditions, the Bank of England today expanded its emergency bond purchase program to include inflation-linked debt.

The pan European Stoxx 600 was down 0.9 percent at 386.63 after declining 0.4 percent on Monday.

The German DAX dropped 0.8 percent, France’s CAC 40 index shed 0.7 percent and the U.K.’s FTSE 100 was down 1.3 percent.

Miners Anglo American, Antofagasta and Glencore lost 3-4 percent in London as commodity prices fell on demand worries due to a flare-up in China COVID-19 cases.
Oil & gas firm BP Plc declined 3 percent and Shell gave up 2.1 percent.

Greencore shed 1.6 percent despite the convenience food manufacturer posting improved annual revenue and profits.

Ferrexpo, an iron ore pellet producer with operations in central Ukraine, plunged 10 percent.

The company said that production has been temporarily suspended at its operations due to damages to power supply caused by the Russian missile strikes across Ukraine on Monday.

Sanofi shares rose about 1 percent in Paris. Regeneron Pharmaceuticals Inc. and the French drug maker have presented late-breaking positive results from a Phase 3 trial evaluating the investigational use of Dupixent (dupilumab) in children aged 1 to 11 years with active eosinophilic esophagitis.

Givaudan AG, a Swiss maker of flavors, fragrances, and cosmetic ingredients, plummeted 7.4 percent after sales growth slowed in the third quarter.

On the data front, the U.K. jobless rate fell to 3.5 percent in three months to August from 3.6 percent in three months to July, the Office for National Statistics reported.

This was the lowest since December to February 1974. The unemployment rate was forecast to remain unchanged at 3.6 percent.

U.S. Economic Reports

Philadelphia Federal Reserve President Patrick Harker is due to speak on How Anchor Institutions Drive Impact for Their Regions before the Young, Smart and Local event at the University of North Carolina at Greensboro at 11:30 am ET.

At 12 pm ET, Cleveland Federal Reserve President Loretta Mester is scheduled to speak on monetary policy and the economic outlook before a Signature Luncheon hosted by the Economic Club of New York.

The Treasury Department is due to announce the results of this month’s auction of $40 billion worth of three-year notes at 1 pm ET.