U.S. Stocks May See Initial Weakness Following Recent Strength

After trending higher over the past several sessions, stocks may move back to the downside in early trading on Tuesday. The major index futures are currently pointing to a modestly lower open for the markets, with the S&P 500 futures down by 0.1 percent.

The futures edged lower following the release of a report from the Commerce Department showing retail sales in the U.S. increased by much less than expected in the month of June.

The Commerce Department said retail sales edged up by 0.2 percent in June after climbing by an upwardly revised 0.5 percent in May.

Economists had expected retail sales to advance by 0.5 percent compared to the 0.3 percent growth originally reported for the previous month.

Excluding a modest increase in sales by motor vehicles and parts dealers, retail sales still rose by 0.2 percent in June after rising by an upwardly revised 0.3 percent in May.

Economists had expected ex-auto sales to increase by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

Any early selling pressure is likely to be relatively subdued, however, as traders also react to upbeat earnings news from Bank of America (BAC) and Morgan Stanley (MS).

Bank of America and Morgan Stanley both reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Just before the start of trading, the Federal Reserve is scheduled to release its report on industrial production in the month of June. Industrial production is expected to edge down by 0.1 percent in June after slipping by 0.2 percent in May.

The National Association of Home Builders is also due to release its report on homebuilder confidence in the month of July shortly after the open. The housing market index is expected to inch up to 56 in July from 55 in June.

Additionally, the Commerce Department is scheduled to release its report on business inventories in the month of May. Business inventories are expected to rise by 0.2 percent.

Following the strong upward move seen last week, stocks saw some further upside during trading on Monday. With the continued advance, the Nasdaq and the S&P 500 once again reached their best closing levels in over a year.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Nasdaq jumped 131.25 points or 0.9 percent to 14,244.95, the S&P 500 climbed 17.37 points or 0.4 percent to 4,522.79 and the Dow rose 76.32 points or 0.2 percent to 34,585.35.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while Hong Kong’s Hang Seng Index plunged by 2.1 percent.

Meanwhile, the major European markets are roughly flat on the day. While the German DAX Index is down by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both just below the unchanged line.

In commodities trading, crude oil futures are rising $0.28 to $74.41 a barrel after slumping $1.27 to $74.15 a barrel on Monday. Meanwhile, after falling $8 to $1,956.40 an ounce in the previous session, gold futures are climbing $12.80 to $1,969.20 an ounce.

On the currency front, the U.S. dollar is trading at 138.54 yen compared to the 138.71 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.225 compared to yesterday’s $1.1236.

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