U.S. Stocks May Experience Choppy Trading Early On

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to experience choppy trading after ending the previous session sharply higher.

The futures remained little changed after the Commerce Department released a report showing retail sales in the U.S. inched up slightly less than expected in the month of May.

The Commerce Department said retail sales crept up by 0.1 percent in May after dipping by a revised 0.2 percent in April.

Economists had expected retail sales to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Excluding an increase in sales by motor vehicle and parts dealers, retail sales edged down by 0.1 percent in May after slipping by a revised 0.1 percent in April.

Economists had expected ex-auto sales to climb by 0.2 percent, matching the increase originally reported for the previous month.

Overall trading activity may be somewhat subdued ahead of the Juneteenth holiday on Wednesday, when the markets will be closed.

However, it is worth noting, stocks showed a lack of direction in early trading on Monday before significant buying interest emerged and lifted the markets to new record highs.

Stocks showed a lack of direction early in the session on Monday but moved notably higher over course of the trading day. The major averages all moved to the upside, with the Nasdaq and the S&P 500 reaching new record closing highs.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Nasdaq jumped 168.14 points or 1.0 percent to 17,857.02, the S&P 500 advanced 41.63 points or 0.8 percent to 5,473.23 and the Dow climbed 188.94 points or 0.5 percent to 38,778.10.

Traders initially seemed reluctant to make significant moves as they took a moment to assess the recent activity in the markets and the near-term outlook.

Buying interest emerged over the course of the session, however, with stocks potentially benefiting from the positive sentiment generated last week.

Tamer-than-expected inflation data led to strong gains by the Nasdaq and the S&P 500 last week, although the narrower Dow bucked the uptrend.

While Federal Reserve officials forecast just one interest rate cut this year following last Wednesday’s monetary policy meeting, traders remain hopeful the predictions will turn out to be overly conservative if inflation continues to slow in the coming months.

On the U.S. economic front, the Federal Reserve Bank of New York released a report showing New York manufacturing activity contracted at a notably slower rate in the month of June.

The New York Fed said its general business conditions index climbed to a negative 6.0 in June from a negative 15.6 in May, although a negative reading still indicates contraction. Economists had expected the index to rise to a negative 9.0.

Despite the continued contraction in current activity, the New York Fed said optimism about the six-month outlook picked up to its highest level in more than two years.

Oil service stocks moved sharply higher along with the price of crude oil, with the Philadelphia Oil Service Index surging by 2.1 percent after ending last Friday’s trading at a four-month closing low.

Considerable strength also emerged among computer hardware stocks, as reflected by the 2.0 percent jumped by the NYSE Arca Computer Hardware Index.

Airline stocks also showed a significant move to the upside on the day, driving the NYSE Arca Airline Index up by 1.7 percent.

Semiconductor, banking and software stocks also saw notable strength, while utilities and telecom stocks bucked the uptrend.

Commodity, Currency Markets

Crude oil futures are inching up $0.03 to $80.36 a barrel after surging $1.88 to $80.33 a barrel on Monday. Meanwhile, after slumping $20.10 to $2,329 an ounce in the previous session, gold futures are edging up $3.70 to $2,332.70 an ounce.

On the currency front, the U.S. dollar is trading at 157.73 yen compared to the 157.74 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0729 compared to yesterday’s $1.0734.

Asia

Asian stocks advanced on Tuesday after a rally in several technology shares drove Wall Street to another record high overnight.

The dollar took a breather ahead of key U.S. retail sales and business activity data as well as speeches from several Federal Reserve officials due this week. Gold was little changed, while oil consolidated recent gains.

China’s Shanghai Composite Index rose 0.5 percent to 3,030.25 despite rising China-EU trade tensions. China has opened a trade probe into pork imported from Europe a week after the EU imposed extra tariffs on Chinese electric vehicles.

Hong Kong’s Hang Seng Index ended 0.1 percent lower at 17,915.55 after a choppy session.

Japanese markets bounced back after suffering heavy losses in the previous session. The Nikkei 225 Index rallied 1.0 percent to 38,482.11 as Bank of Japan Governor Kazuo Ueda hinted at the possibility of an upcoming interest rate increase in July. The broader Topix Index finished 0.6 percent higher at 2,715.76.

Chip-making equipment maker Tokyo Electron jumped 2.7 percent and electronic parts maker TDK surged 6.3 percent.

Toyota Motor rose half a percent after Akio Toyoda, grandson of Toyota Motor Corp’s founder, won shareholders’ approval to stay at the automaker’s helm.

Seoul stocks rose notably after the country’s central bank chief hinted at easing inflation with potential interest rate cuts by year-end. The Kospi climbed 0.7 percent to 2,763.92.

Australian markets rallied as the Reserve Bank held rates steady but cautioned that inflation is still above the target. The benchmark S&P/ASX 200 Index jump 1.0 percent to 7,778.10, while the broader All Ordinaries Index advanced 0.9 percent to 8,015.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index gained 0.6 percent to close at 11,767.40.

Europe

European stocks have eked out modest gains on Tuesday after Eurozone CPI was finalized at 2.6 percent year-on-year in May, up from April’s 2.4 percent as widely expected.

The headline German ZEW Economic Sentiment Index ticked up to 47.5 in June from 47.1 in May, while industry data showed U.K. grocery inflation fell for a sixteenth month in a row in June.

While the German DAX Index has risen by 0.3 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both up by 0.5 percent.

In corporate news, Novonesis has surged after the Danish biotechnology group raised its full-year outlook, citing rising demand for its biosolutions.

Electric equipment and automation systems maker Schneider Electric has also moved to the upside in Paris after Jefferies upgraded the stock’s rating to “buy” from “hold”.

Whitbread has also rallied in London. The British hotel group reiterated its annual forecast despite posting flat first quarter sales.

Frasers Group has also advanced after launching a new share buyback program of up to £80 million to reduce share capital of the company.

Meanwhile, Carrefour shares have plunged after reports that the finance ministry wanted to levy a “record fine” against the supermarket group for management of its franchise network.

Equipment rental firm Ashtead Group has also moved sharply lower after it forecast slower growth in rental revenue for fiscal 2025.

U.S. Economic Reports

Retail sales in the U.S. inched slightly higher in the month of May, according to a report released by the Commerce Department on Tuesday.

The Commerce Department said retail sales crept up by 0.1 percent in May after dipping by a revised 0.2 percent in April.

Economists had expected retail sales to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Excluding an increase in sales by motor vehicle and parts dealers, retail sales edged down by 0.1 percent in May after slipping by a revised 0.1 percent in April.

Economists had expected ex-auto sales to climb by 0.2 percent, matching the increase originally reported for the previous month.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of May. Industrial production is expected to rise by 0.3 percent in May after coming in unchanged in April.

The Commerce Department is due to release its report on business inventories in the month of April at 10 am ET. Business inventories are expected to increase by 0.3 percent in April after edging down by 0.1 percent in March.

Also at 10 am ET, Richmond Federal Reserve President Thomas Barkin is scheduled to participate in a MNI Webcast discussion.

Boston Federal Reserve President Susan Collins is due to speak before the Lawrence Partnership Annual Meeting & 10th Year Anniversary at 11:40 am ET.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $13 billion worth of twenty-year bonds.

Dallas Federal Reserve President Lorie Logan is also due to participate in a moderated question-and-answer session before the Headliners Club Speaker Series at 1 pm ET.

Also at 1 pm ET, St. Louis Federal Reserve President Alberto Musalem is scheduled to speak at a CFA Society St. Louis luncheon.

Chicago Federal Reserve President Austan Goolsbee is due to participate in an “Economic and Monetary Policy” panel before the 2024 Marshall Forum at 2 pm ET.