Futures Pointing To Initial Pullback On Wall Street

After ending the previous session mostly higher, stocks may move back to the downside in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.5 percent.

Some trades may look to cash in on yesterday’s strong gains amid lingering uncertainty about the outlook for interest rates.

While the Federal Reserve is widely expected to leave interest rates unchanged later this month, traders have recently become increasingly tentative about whether the central bank will cut rates in March.

CME Group’s FedWatch Tool still indicates a 57.3 percent chance the Fed will lower rates by a quarter point in March, but that figure is well below recent highs.

An increase in treasury yields may also weigh on the markets, with the yield on the benchmark ten-year note rebounding after turning lower over the course of the previous session.

On the U.S. economic front, the Commerce Department released a report showing the U.S. trade deficit unexpectedly shrank in the month of November.

The report said the trade deficit narrowed to $63.2 billion in November from a revised $64.5 billion in October. Economists had expected the trade deficit to widen to $65.0 billion from the $64.3 billion originally reported for the previous month.

The unexpectedly smaller trade deficit came as the value of imports tumbled by 1.9 percent to $316.9 billion, while the value of export slumped by 1.9 percent to $253.7 billion.

U.S. stocks ended on a buoyant note on Monday, with the Nasdaq outperforming the other major averages thanks to hectic buying in the technology sector.

A drop in bond yields and optimism about the outlook for stocks despite recent uncertainty about the likelihood of near-term interest rate cuts helped push stock prices higher.

The major averages all ended with strong gains. The Dow ended up 216.90 points or 0.6 percent at 37,683.01, the S&P 500 jumped 66.30 points or 1.4 percent to 4,763.54, and the Nasdaq settled with a gain of 319.70 points or 2.2 percent at 14,843.77.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index jumped by 1.2 percent, while Hong Kong’s Hang Seng Index dipped by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index has edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index are both down by 0.5 percent.

In commodities trading, crude oil futures are jumping $1.85 to $72.62 a barrel after plunging $3.04 to $70.77 a barrel on Monday. Meanwhile, after falling $16.30 to $2,033.50 an ounce in the previous session, gold futures are inching up $5.40 to $2,038.90 an ounce.

On the currency front, the U.S. dollar is trading at 143.89 yen compared to the 144.23 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0942 compared to yesterday’s $1.0950.