U.S. Stocks May Move Back To The Upside In Early Trading

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to move back to the upside following the modest weakness seen on Monday.

Optimism about the outlook for interest rates may inspire renewed buying interest on Wall Street following the Federal Reserve’s monetary policy announcement last week.

While the Fed left interest rates unchanged, as widely expected, officials maintained their forecast for three rate cuts this year.

Following the Fed announcement, the chances of a 25 basis point rate cut in June have rebounded to 64.4 percent, according to CME Group’s FedWatch Tool.

The major averages rallied to record highs on the heels of the Fed announcement last week, leading to some profit taking over the past two sessions.

Selling pressure remained subdued, however, as traders seem more concerned about missing out on further upside than suggestions the markets are overbought.

After an early move to the downside, stocks fluctuated over the course of the trading session on Monday but largely maintained a negative bias. The major averages all finished the day lower after ending last Friday’s trading mixed.

The tech-heavy Nasdaq fell 44.35 points or 0.3 percent to 16,384.47, pulling back off the record closing high set in the previous session, while the S&P 500 dipped 15.99 points or 0.3 percent to 5,218.19 and the Dow slid 162.26 points or 0.4 percent to 39,313.64.

Weakness among technology stocks weighed on the markets early in the session, with semiconductor giant Intel (INTC) plunging by as much as 4.7 percent to its lowest intraday level in over four months.

The steep drop came after a report from the Financial Times said China has introduced new guidelines to phase microprocessors from Intel and Advanced Micro Devices (AMD) out of government PCs and servers.

Intel climbed well off its worst levels but still slumped by 1.7 percent, while AMD ended the day down by 0.6 percent.

Shares of Microsoft (MSFT) also fell by 1.4 percent after the FT said stricter Chinese government procurement guidance also seeks to sideline the company’s Windows operating system and foreign-made database software in favor of domestic options.

Nonetheless, selling pressure remained relatively subdued, as traders seemed reluctant to make more significant moves ahead of the release of some key economic data in the coming days.

Traders are likely to keep an eye on reports on durable goods orders, consumer confidence and pending home sales, although a report on personal income and spending that includes readings on inflation said to be preferred by the Fed will be released when the markets are closed for Good Friday.

The Commerce Department released a report this morning showing new home sales in the U.S. unexpectedly decreased in the month of February.

The report said new home sales dipped by 0.3 percent to an annual rate of 662,000 in February after jumping by 1.7 percent to a revised rate of 664,000 in January.

Economists had expected new home sales to surge by 2.9 percent to a rate of 680,000 from the 661,000 originally reported for the previous month.

Despite the modest weakness shown by the broader markets, airline stocks showed a strong move to the upside on the day, with the NYSE Arca Airline Index climbing by 1.5 percent.

Oil service stocks also saw considerable strength amid a sharp increase by the price of crude oil, driving the Philadelphia Oil Service Index up by 1.2 percent to a five-month closing high.

Computer hardware and oil producer stocks also saw some strength on the day, while software stocks moved to the downside.

Commodity, Currency Markets

Crude oil futures are inching up $0.14 to $82.09 a barrel after jumping $1.32 to $81.95 a barrel on Monday. Meanwhile, after climbing $16.60 to $2,198.20 an ounce in the previous session, gold futures are advancing $18.40 to $2,216.60 an ounce.

On the currency front, the U.S. dollar is trading at 151.44 yen compared to the 151.42 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0850 compared to yesterday’s $1.0837.

Asia

Asian stocks turned in a mixed performance on Tuesday as geopolitical tensions intensified and interest rate jitters persisted. Rising tensions in the Middle East and Russia boosted crude oil prices and brought inflation concerns to the fore.

Investors kept a close eye on upcoming inflation data and comments from central bank officials for additional clues on the rate outlook.

Chinese markets ended on a positive note after reports emerged that regulators are pushing banks to speed up approvals of new loans to private property developers.

China’s Shanghai Composite Index inched up 0.2 percent to 3,031.48, while Hong Kong’s Hang Seng Index jumped 0.9 percent to close at 16,618.32.

Japanese markets fluctuated before finishing on a flat note. The Nikkei 225 Index ended marginally lower at 40,398.03, while the broader Topix Index crept up 0.1 percent to 2,780.80.

SoftBank Group gave up 1.2 percent, Fast Retailing fell 1.6 percent and Nissan Motor slumped 3.9 percent to lead losses while chipmaking equipment giant Tokyo Electron rose half a percent.

Detailing a new mid-term plan, Nissan said it plans to cut the costs of manufacturing electric vehicles by nearly a third by fiscal 2030.

Seoul stocks advanced to end a two-session losing streak as semiconductor shares surged. The Kospi climbed 0.7 percent to 2,757.09.

Samsung Electronics, the world’s biggest memory chipmaker, rallied 2.2 percent and peer SK Hynix jumped 4.3 percent, while Hanmi Semiconductor, a local equipment firm, soared 15.5 percent.

Australian stocks closed lower, dragged down by technology and resource stocks. The benchmark S&P/ASX 200 Index dropped 0.4 percent to 7,780.20, while the broader All Ordinaries Index settled 0.4 percent lower at 8,036.70.

Heightened geopolitical tensions dented sentiment after the Islamic State group, also known as ISIS, claimed responsibly for Friday’s deadly assault on a concert venue in Moscow.

Gaza was also in focus after the United States abstained from voting on a UN Security Council resolution demanding an immediate ceasefire.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slipped 0.3 percent to 12,031.81 on concerns over the oil price flare up in recent sessions on supply concerns.

Europe

European stocks are mostly higher on Tuesday as traders look ahead to the Easter break and the release of key European and U.S. inflation readings for directional cues.

Geopolitical tensions also remained in focus after Russian President Vladimir Putin acknowledged for the first time that “radical Islamists” were responsible for last week’s attack on a concert hall outside Moscow and claimed that Ukraine was also somehow involved.

“We know that the crime was committed by the hands of radical Islamists, whose ideology the Islamic world itself has been fighting for centuries,” Putin said in a televised meeting.

In economic news, a survey showed German consumer confidence is set to improve in April.

The forward-looking consumer confidence index rose to -27.4 in April from revised -28.8 in March, according to a survey conducted by the market research group GfK and the Nuremberg Institute for Market Decisions (NIM).

Elsewhere, Spainish economic growth improved at the end of the year, as initially estimated, final data from the statistical office INE showed.

Gross domestic product grew 0.6 percent from the third quarter, when output was up 0.4 percent. The rate came in line with the estimate published on January 30.

On a yearly basis, economic growth improved to 2.0 percent, as estimated, from 1.9 percent in the preceding period.

While the German DAX Index has climbed by 0.7 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

Grocery delivery service Ocado has moved higher in London after the company reported a strong first quarter performance with 10.6 percent revenue growth year-on-year.

Flutter Entertainment has also moved to the upside after announcing strong financial results for 2023.

Smiths Group has also jumped. The engineering group has launched a £100 million share buyback after posting strong half-year earnings results.

Wind turbines maker Nordex SE has also gained after it won an order to supply and install 57 N163/5.X turbines from the Delta4000 series in South Africa to an unnamed customer.

On the other hand, homebuilder Bellway has moved to the downside after its pretax profit fell for the first half.

Wacker Neuson SE, a German construction equipment and machinery maker, has also slid after saying it is facing high levels of uncertainty due to volatile political and economic developments.

For the full year, the company expects growth to be either flat or a tad lower in all its regions and segments.

U.S. Economic Reports

Partly reflecting a rebound in orders for transportation equipment, the Commerce Department released a report on Tuesday showing a notable increase in new orders for U.S. manufactured durable goods in the month of February.

The report said durable goods orders jumped by 1.4 percent in February after plummeting by a revised 6.9 percent in January.

Economists had expected durable goods orders to shoot up by 1.3 percent compared to the 6.2 percent slump that had been reported for the previous month.

Orders for transportation equipment led the way higher, surging by 3.3 percent in February after plunging by 18.3 percent in January.

Excluding the rebound in orders for transportation equipment, durable goods orders climbed by 0.5 percent in February after falling by 0.3 percent in January. Economists had expected a 0.4 percent increase.

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

The Conference Board is due to release its report on consumer confidence in the month of March at 10 am ET. The consumer confidence index is expected to come in unchanged in March after falling to 106.7 in February.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $67 billion worth of five-year notes.

Stocks In Focus

Shares of Krispy Kreme (DNUT) are soaring in pre-market trading after the company announced an expanded partnership with McDonald’s (MCD), with the fast food giant expected to sell Krispy Kreme donuts nationwide by the end of 2025.

Data storage company Seagate Technology (STX) is also likely to see initial strength after Morgan Stanley upgraded its rating on the company’s stock to Upgrade from Overweight.

Shares of McCormick (MKC) are also moving sharply higher in pre-market trading after the spice maker reported fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.