Tech Stocks May Lead Extended Recovery On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to extend the rebound seen over the course of the previous session.

Technology stocks may continue to lead the recovery on Wall Street, with the tech-heavy Nasdaq 100 futures jumping by 0.9 percent.

Traders may continue to look to pick up stocks at relatively reduced levels after the Nasdaq fell to a two-month low last Friday. The S&P 500 also ended last Friday’s trading at its lowest closing level in well over a month.

A pullback by bond yields may also contribute to strength on Wall Street, as the yield on the benchmark ten-year note is giving back ground after reaching its highest levels in over 15 years.

Positive sentiment may also be generated in reaction to earnings news from Lowe’s (LOW), with the home improvement retailer jumping by 2.4 percent in pre-market trading.

Lowe’s reported fiscal second quarter earnings that exceeded analyst estimates and reaffirmed its full-year revenue guidance.

Stocks moved mostly higher over the course of the trading session on Monday, regaining ground following recent weakness. Technology stocks helped lead the rebound, resulting in a substantial gain by the Nasdaq.

The Nasdaq surged 206.81 points or 1.6 percent to 13,497.59 and the S&P 500 climbed 30.06 points or 0.7 percent to 4,399.77, while the narrower Dow staged a recovery attempt from early weakness but still closed down 36.97 points or 0.1 percent at 34,463.69.

The spike by the Nasdaq came as traders picked up tech stocks at reduced levels following recent weakness, with the index bouncing off its lowest closing level in two months.

Cybersecurity company Palo Alto Networks (PANW) posted a standout gain after reporting better than expected fiscal fourth quarter earnings.

Shares of Nvidia (NVDA) also moved notably higher after HSBC reiterated a Buy rating on the chipmaker’s stock and raised its price target.

Meanwhile, a steep drop by Johnson & Johnson (JNJ) contributed to the dip by the Dow, with the healthcare giant slumping by 3.0 percent.

Johnson & Johnson said its offer to its shareholders to exchange their shares of J&J common stock for shares of Kenvue (KVUE) common stock owned by the company was oversubscribed.

Trades continued to look ahead to the economic summit in Jackson Hole, Wyoming, where major central bankers are congregating later in the week to deliberate on monetary policy.

Federal Reserve Chair Jerome Powell is scheduled to speak on the economic outlook before the Jackson Hole Economic Symposium on Friday.

Semiconductor stocks moved sharply higher over the course of the session, resulting in a 2.8 percent spike by the Philadelphia Semiconductor Index.

Significant strength also emerged among software stocks, as reflected by the 1.8 percent jump by the Dow Jones U.S. Software Index.

Biotechnology and computer hardware stocks also turned in strong performances on the day, contributing to the surge by the Nasdaq.

Commodity, Currency Markets

Crude oil futures are edging down $0.10 to $80.62 a barrel after falling $0.53 to $80.72 barrel on Monday. Meanwhile, after rising $6.50 to $1,923 an ounce in the previous session, gold futures are climbing $6.80 to $1,929.80 an ounce.

On the currency front, the U.S. dollar is trading at 145.94 yen compared to the 146.22 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0878 compared to yesterday’s $1.0896.

Asia

Asian markets finished trading on a positive note on Tuesday following a mixed performance in the previous session. Benchmarks in China and Hong Kong finished with decent gains, helped by strength in the tech sector.

China’s Shanghai Composite Index gained 27.36 points or 0.9 percent to finish trading at 3,120.33. The day’s trading ranged between 3,074.53 and 3,126.78. The Shenzhen Component Index added 54.33 points or 0.5 percent to close at 10,374.73.

The Japanese benchmark Nikkei 225 Index jumped 291.07 points or 0.9 percent to end trading at 31,856.71. The day’s trading range was between 31,692.50 and 31,922.50.

Advantest Corp. topped gains with a rally of 4.6 percent. Resona Holdings, Toyota Tsusho Corp., Kuraray Co. and Mitsubishi UFJ Financial Group all added more than 3 percent.

Meanwhile, Eisai, Keisei Electric Railway, Kawasaki Kisen Kaisha and Kao Corp. all declined more than 1 percent.

The Hang Seng Index of the Hong Kong Stock Exchange added 167.72 points or 1.0 percent from the previous close to finish trading at 17,791.01. The day’s trading range was between a high of 17,965.26 and a low of 17,573.70.

The Korean Stock Exchange’s Kospi Index gained 6.94 points or 0.3 percent to close trading at 2,515.74. The day’s trading range was between 2,509.53 and 2,533.43.

Australia’s S&P/ASX 200 Index closed trading at 7,121.60, adding 6.10 points or 0.1 percent. The day’s trading range was between 7,090 and 7,125.

Software business Altium surged close to 26 percent following an upgrade to analyst estimates. Megaport, another software business, rallied close to 17 percent after it updated its fiscal 2024 guidance.

Financial services business Hub24 spike 11 percent following an earnings release and buyback announcement. Paladin Energy gained more than 8 percent. Sandfire Resources, which secured an extension for the Motheo Copper Mine’s license, gained close to 6 percent.

Biotechnology business Imugene and mining company Alumina shed close to 8 percent. NIB Holdings and Coles Group both declined more than 7 percent. Healthcare business Healius shed a little over 5 percent.

The NZX 50 of the New Zealand Stock Exchange added 26.57 points or 0.2 percent to close at 11,485.26. Trading ranged between 11,423.94 and 11,489.18.

Oceania Healthcare topped gains with a surge of 4 percent. A2 Milk Company and Freightways both added more than 3 percent. Argosy Property and Vista Group International both followed with gains of more than 2 percent.

Restaurant Brands NZ extended losses with a decline of more than 3 percent. Chorus, Vital Healthcare Property Trust, Fonterra Shareholders Fund and Sky Network television all declined more than 2 percent.

Europe

European stocks are firmly in positive territory on Tuesday amid expectations of a good earnings update from U.S. technology major Nvidia, and preliminary reports on manufacturing activity in the month of August.

A drop in bond yields is also contributing to the positive mood in the stock markets. Several stocks have moved higher on bargain hunting after recent sharp losses.

Investors are also looking ahead to the upcoming Jackson Hole Symposium in Wyoming, where central bankers are meeting. Federal Reserve Chairman Jerome Powell is scheduled to speak on Friday.

While the U.K.’s FTSE 100 Index has climbed by 0.7 percent, the German DAX Index and the French CAC 40 Index are up by 1.2 percent and 1.3 percent, respectively.

In economic news, data from the European Central Bank showed the eurozone recorded a current account surplus of 36.8 billion euros in June compared to a revised 4.4 billion euro deficit in the same month last year.

Data released by the Office for National Statistics showed public sector net borrowing in the U.K. was £3.5 billion in July 2023, up from £0.1 billion in the same month last year.

Public sector net borrowing excluding banks in the U.K. was £4.3 billion in July 2023, up from £0.9 billion in the same month last year and below market forecasts of £5.0 billion, the data showed.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales in the month of July at 10 am ET. Existing home sales are expected to edge down to an annual rate of 4.15 million in July after tumbling to a rate of 4.16 million in June.

At 2:30 pm ET, Chicago Federal Reserve President Austan Goolsbee is due to participate a “Fed Listens: Joining the Labor Force After Covid — A Discussion on Youth Employment” event.

Stocks In Focus

Shares of Fabrinet (FN) are soaring in pre-market trading after the advanced manufacturing services company reported fiscal fourth quarter results that beat analyst estimates on both the top and bottom lines.

Marketing platform AppLovin (APP) is also likely to see initial strength after Jefferies upgraded its rating on the company’s stock to Buy from Hold.

On the other hand, shares of Dick’s Sporting Goods (DKS) seeing substantial pre-market weakness after the sporting goods retailer reported weaker than expected fiscal second quarter results and lowered its full-year guidance.

Department store chain Macy’s (M) may also move to the downside after reporting fiscal second quarter results that exceeded analyst estimates but providing disappointing guidance for the current quarter.