U.S. Stocks May Lack Direction Following Yesterday’s Modest Pullback

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 following the modest pullback seen in the previous session.

Uncertainty about the near-term outlook for the markets may lead to choppy trading on Wall Street following last week’s advance by the Dow and S&P 500 to new record highs.

Traders may also stick to the sidelines ahead of the release of some key economic data later this week, including a closely watched inflation reading.

The Commerce Department’s report on personal income and spending, which is scheduled to be released on Thursday, includes a reading on consumer price inflation said to be preferred by the Federal Reserve.

The inflation data could have a notable impact on the outlook for interest rates, as Fed officials have said they need greater confidence inflation is slowing before cutting rates.

U.S. stocks ended on a negative note on Monday, and the major averages turned weak after a slightly positive start, as investors largely stayed cautious ahead of some key economic data.

Among the major averages, the Dow ended lower by 62.30 points or 0.2 percent at 39,069.23. The S&P 500 settled with a loss of 19.27 points or 0.4 percent at 5,069.53. The Nasdaq, which spent much of the day’s session in positive territory despite a choppy ride, ended down 20.57 points or 0.1 percent at 15,976.25.

In economic news, data released by the Commerce Department showed new home sales climbed 1.5 percent to an annual rate of 661,000 in January after surging by 7.3 percent to a revised rate of 651,000 in December.

With the increase, new home sales continued to regain ground after hitting their lowest level in a year in November. Economists had expected new home sales to jump by 2.4 percent to a rate of 680,000 in January from the 664,000 originally reported for the previous month.

Palo Alto Networks shares climbed more than 7 percent. Dominos Pizza surged nearly 6 percent after reporting stronger than expected quarterly earnings.

Micron Technology, Tesla, Applied Materials, Illumina, Salesforce.com and Arista Networks gained 2 to 4 percent.

Walmart, Marathon Petroleum, Marathon Oil, Qualcomm and Costco also posted strong gains.

Berkshire Hathaway lost nearly 2 percent, despite the group posted an annual profit of $97 billion, its second straight record annual profit.

Alphabet, Walgreens Boots Alliance, Whirlpool, Moderna, Verizon and Pfizer also ended sharply lower.

Commodity, Currency Markets

Crude oil futures are slipping $0.11 to $77.47 a barrel after jumping $1.09 to $77.58 a barrel on Monday. Meanwhile, after falling $10.50 to $2,038.90 an ounce in the previous session, gold futures are rising $8.10 to $2,047 an ounce.

On the currency front, the U.S. dollar is trading at 150.28 yen compared to the 150.70 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0845 compared to yesterday’s $1.0851.

Asia

Asian stocks ended mixed on Tuesday after Japanese inflation topped estimates in January, adding to pressure on the Bank of Japan to make a significant policy shift in the coming months.

Gold and oil prices traded higher in Asian trading, while the dollar dropped before key inflation and GDP readings this week that could influence the Fed’s rate trajectory.

Chinese shares rallied after reports state-backed funds have poured more than 410 billion yuan ($57 billion) into onshore shares this year.

The benchmark Shanghai Composite Index jumped 1.3 percent to 3,015.48, while Hong Kong’s Hang Seng Index advanced 0.9 percent to 16,790.80.

Japanese markets ended on a flat note, while the yen edged higher, as new data showed inflation in the country slowed less than expected to two percent in January – hitting the central bank’s target and firming expectations of a shift in monetary policy.

The Nikkei 225 Index ended marginally higher at 39,239.52, while the broader Topix Index edged up 0.2 percent to 2,678.46.

Heavyweight Advantest fell 2.1 percent as investors locked in profits.

Banks rose, with Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group climbing 2.5 percent and 1.4 percent, respectively. Steelmakers Kobe Steel and Nippon Steel both surged over 4 percent.

Seoul stocks fell notably, with the Kospi closing down 0.8 percent at 2,625.05 ahead of the release of major U.S. economic data this week.

SK Telecom dropped 1.1 percent after the telco partnered with U.S. AI startup Perplexity to offer the artificial intelligence-based search engine to its users as an alternative to Google and Naver.

Australian stocks ended little changed as energy firms and financials advanced, offsetting losses in the mining sector.

The benchmark S&P/ASX 200 Index inched up 0.1 percent to 7,663 as investors braced for the U.S. and Australian inflation readings and the New Zealand’s Central Bank policy decision.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.1 percent to 11,694.60.

Europe

European stocks have struggled for direction on Tuesday as a slew of data painted a mixed picture of regional economies.

Survey results from market research group GfK showed consumer confidence in Germany is set to improve slightly in March.

The forward-looking consumer sentiment index rose to -29.0 in March from -29.6 in February – matching economists’ expectations.

Monthly survey results from the statistical office INSEE showed France’s consumer confidence unexpectedly weakened in February.

The consumer sentiment index fell to 89 from 91 in the previous month. The score was forecast to improve to 92.

Elsewhere, data from the British Retail Consortium showed U.K. shop price inflation weakened to a near two-year low in February.

The shop price index posted an annual increase of 2.5 percent on a yearly basis in February, slower than the 2.9 percent rise in January. This was the lowest since March 2022.

While the German DAX Index is up by 0.5 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 0.1 percent.

Asset manager Abrdn has soared after narrowing its full-year losses and announcing plans to cut around 500 jobs as part of a cost reduction program.

Medical device giant Smith & Nephew has also rallied after posting improved financial results for the fourth quarter and full year 2023.

French retailer Casino has skyrocketed after a French court gave the green light for its restructuring plan.

Capgemini shares have edged up slightly. The technology company has inked a over 100 million euros deal with TenneT, a European transmission system operator, to design, build, and implement a cloud platform to boost the functioning of TenneT.

Construction-to-telecoms conglomerate Bouygues have rallied after posting annual core profit above its guidance.

Germany’s Schaeffler AG has also moved to the upside after announcing plans to build a new facility for e-mobility solutions in the U.S.

PUMA traded slightly higher, giving up early gains. The sportswear firm expects a soft first half of 2024 but stuck to the annual targets it gave in January.

Meanwhile, shares of SEB have plunged after Peugeot Invest successfully sold a stake in the household equipment manufacturer.

U.S. Economic Reports

New orders for U.S. manufactured durable goods saw a substantial decrease in the month of January, according to a report released by the Commerce Department on Tuesday.

The Commerce Department said durable goods orders plunged by 6.1 percent in January after falling by a revised 0.3 percent in December.

Economists had expected durable goods orders to tumble by 4.5 percent compared to the unchanged reading that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders dipped by 0.3 percent in January after edging down by 0.1 percent in December. Ex-transportation orders were expected to rise by 0.2 percent.

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

Federal Reserve Vice Chair for Supervision Michael Barr is due to speak on “Counterfeit Credit Risk” before the Conference on Counterparty Credit Risk Management hosted by the Federal Reserve Bank of New York at 9:05 am ET.

At 10 am ET, the Conference Board is scheduled to release its report on consumer confidence in the month of February. The consumer confidence index is expected to inch up to 115.0 in February after jumping to 114.8 in January.

The Treasury Department is due to announce the results of this month’s auction of $42 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of Viking Therapeutics (VKTX) are skyrocketing in pre-market trading after the biopharmaceutical company announced positive top-line results from a Phase 2 clinical trial of its weight-loss treatment.

Video conferencing company Zoom Video (ZM) is also seeing significant pre-market strength after reporting better than expected fourth quarter results and announcing a $1.5 billion stock buyback.

Meanwhile, shares of Unity Software (U) are likely to come under pressure after the video game software developer reported fourth quarter earnings that beat analyst estimates but provided disappointing guidance.