Futures Pointing To Modestly Higher Open On Wall Street

The major U.S. index futures are currently pointing to modestly higher open for the markets on Tuesday, with stocks likely to extend the significant rebound seen in the previous session.

Bargain hunting may contribute to continued strength on Wall Street, as stocks remain at relatively reduced levels even after yesterday’s rally.

However, traders may be reluctant to make significant moves as they continue to look ahead to tomorrow’s Federal Reserve announcement.

While the Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

CME Group’s FedWatch Tool is currently indicating a 98.2 percent chance the Fed will leave rates unchanged on Wednesday and a 74.3 percent chance rates will remain unchanged next month.

A steep drop by shares of Caterpillar (CAT) may also limit any upside for the Dow, with the equipment maker slumping by 5.9 percent in pre-market trading after reporting better than expected third quarter earnings but providing disappointing fourth quarter revenue guidance.

Stocks moved sharply higher over the course of the trading session on Monday, partly offsetting the steep losses posted last week. The major averages all showed significant moves to the upside following the mixed performance seen last Friday.

The major averages pulled back off their highs going into the close but held on to strong gains. The Dow spiked 511.37 points or 1.6 percent to 32,928.96, the Nasdaq jumped 146.47 points or 1.2 percent to 12,789.48 and the S&P 500 surged 49.45 points or 1.2 percent to 4,166.82.

The rebound on Wall Street partly reflected bargain hunting, with traders picking up stocks at reduced levels following last week’s sell-off.

The Dow slumped to its lowest closing level in seven months last Friday, while the S&P 500 slid to a new five-month closing low.

The steep drop seen last week reflected ongoing concerns about the outlook for interest rates as well as worries about the conflict in the Middle East.

The advance by the Dow came amid a strong gain by shares of McDonald’s (MCD), with the fast food giant jumping by 1.7 percent after reporting third quarter results that exceeded analyst estimates on both the top and bottom lines.

Meanwhile, traders continued to look ahead to the Federal Reserve’s highly anticipated monetary policy announcement on Wednesday.

Retail stocks extended the rally seen last Friday, with the Dow Jones U.S. Retail Index surging by 2.5 percent, climbing further off the five-month closing low set last Thursday.

Considerable strength was also visible among transportation stocks, driving the Dow Jones Transportation Average up by 2.0 percent. The average ended last Friday’s trading at its lowest closing level in six months.

Telecom stocks also turned in a strong performance on the day, as reflected by the 2.0 percent gain posted by the NYSE Arca North American Telecom Index.

Software, banking and pharmaceutical stocks also saw significant strength, while networking stocks showed a substantial move to the downside.

The NYSE Arca Networking Index plunged by 3.1 percent, with CommScope Holding (COMM) leading the way lower after warning of weaker than expected third quarter results and lowering its full-year guidance.

Commodity, Currency Markets

Crude oil futures are climbing $0.37 to$82.68 a barrel after soaring $3.23 to $82.31 on Monday. Meanwhile, after rising $7.10 to $2,005.60 an ounce in the previous session, gold futures are inching up $4.20 to $2,009.80 an ounce.

On the currency front, the U.S. dollar is trading at 150.82 yen compared to the 149.10 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0629 compared to yesterday’s $1.0615.

Asia

Asian stocks ended Tuesday’s session on a mixed note, as Chinese data disappointed and investors awaited cues from the upcoming Federal Reserve meeting.

The Japanese yen languished near a one-year low against the dollar after the Bank of Japan allowed more flexibility in the conduct of yield curve control.

Gold eased and traded below the $2,000 per ounce level ahead of the Fed and Bank of England meetings this week. Oil prices recovered some ground after falling more than 3 percent on Monday.

China’s Shanghai Composite Index finished marginally lower at 3,018.77, as disappointing economic data suggested the momentum of economic growth ebbed at the beginning of the fourth quarter. Hong Kong’s Hang Seng Index tumbled 1.7 percent to 17,112.48.

China’s manufacturing activity contracted unexpectedly in October while the growth in the non-manufacturing sector softened, survey data from the National Bureau of Statistics showed earlier today.

The manufacturing PMI dropped to 49.5 in October,+ while economists expected the score to remain unchanged at 50.2. The non-manufacturing PMI slid to 50.6 from 51.7 a month ago.

Japanese shares reversed course to end higher and the yen weakened after the Bank of Japan tweaked its bond yield control policy, loosening its grip on long-term yields that have been trending upward.

The Nikkei 225 Index rose 0.5 percent to 30,858.85 as the central bank kept its simulative policy in place. The broader Topix Index settled 1.0 percent higher at 2,253.72.

Banks Mitsubishi UFJ Financial, Sumitomo Mitsui Financial and Mizuho Financial rose 1-2 percent, while Panasonic slumped 8.9 percent after slashing the profit outlook at its EV battery unit. Tech stocks suffered heavy losses, with Advantest and Renesas Electronics tumbling 5-6 percent.

Japanese factory output and retail sales rose in September, while the jobless rate fell to 2.6 percent from the previous month, separate data showed earlier in the day.

Seoul stocks fell sharply despite Samsung Electronics predicting a recovery in the semiconductor market next year and September factory output coming in above forecasts.

The Kospi slumped 1.4 percent to 2,277.99 as the country’s stock market regulator announced a wider probe into short-selling trades by foreign investment banks. Samsung Electronics dropped 0.6 percent and No.2 chipmaker SK Hynix gave up 2.4 percent.

Australian markets edged up slightly, led by banks. The benchmark S&P/ASX 200 Index inched up 0.1 percent to 6,780.70, while the broader All Ordinaries index gained 0.1 percent to close at 6,967.50.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index crept up 0.2 percent to end at 10,757.69.

Europe

European stocks have advanced on Tuesday and regional bond yields have dipped after France and the Netherlands reported falling inflation in October.

While the French CAC 40 Index has jumped by 1.1 percent, the German DAX Index is up by 0.7 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

Anheuser Busch Inbev, the world’s largest brewer, has jumped 3.3 percent after reporting third quarter sales above expectations.

Engineering group Wartsila has also spiked after profitability improved in the energy business in the third quarter of 2023.

Spectris has also rallied after the precision instrumentation and controls company said it expects full-year profits to be at the top end of forecasts.

Construction-to-telecoms conglomerate Bouygues has also moved notably higher after posting solid nine-month results and confirming its full-year outlook.

Utility Uniper SE has also surged after it swung to a nine-month net profit of 9.77 billion euros ($10.35 billion).

Chemicals maker BASF has also moved sharply higher as it unveiled fresh cuts to investment and measures to reduce operating costs.

Specialty chemicals company Elementis has also risen despite reporting a decrease in third-quarter revenue from last year.

Meanwhile, Carlsberg has moved to the downside after it warned of weak consumer sentiment in Europe and Southeast Asia.

BP Plc shares have also slumped in London after the energy giant reported a steep drop in third-quarter profits as a result of lower prices for hydrocarbons and lower than expected results from its gas trading operations.

Thales has also tumbled after the French defense electronics maker said its order intake for the period ending September 30, 2023 fell 18 percent on an organic basis.

Germany’s Siemens Energy has also declined after reports that it is considering selling a stake in Indian-listed Siemens to former parent Siemens AG.

U.S. Economic Reports

Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of August at 9 am ET.

At 9:45 am ET, MNI Indicators is due to release its report on Chicago-area business activity in the month of October.

The Chicago business barometer is expected to inch up to 45.0 in October from 44.1 in September, although a reading below 50 would still indicate a contraction.

The Conference Board is scheduled to release its report on consumer confidence in the month of October at 10 am ET. The consumer confidence index is expected to dip to 100.0 in October after tumbling to 103.0 in September.

Stocks In Focus

Shares of Arista Networks (ANET) are moving sharply higher in pre-market trading after the cloud networking solutions company reported third quarter results that beat expectations on both the top and bottom lines.

Image sharing and social media service Pinterest (PINS) is also seeing substantial pre-market strength after reporting better than expected third quarter results.

On the other hand, shares of JetBlue (JBLU) may come under pressure after the airline reported third quarter results that fell short of analyst estimates.

Apparel and footwear company VF Corp. (VFC) is also likely to see initial weakness after reporting weaker than expected fiscal second quarter earnings and withdrawing its full-year guidance.