Futures Pointing To Modestly Lower Open On Wall Street

The major U.S. index futures are currently pointing to a modestly lower open on Tuesday, with stocks likely to move back to the downside following the substantial rebound seen in the previous session.

Traders may look to cash in on yesterday’s tech-led rally amid lingering uncertainty about the outlook for the markets.

Later in the week, focus is likely to shift to a report on personal income and spending in June, which includes readings on inflation said to be preferred by the Federal Reserve.

The data could have a significant impact on the outlook for interest rates, with the Fed currently widely expected to lower interest rates by a quarter point in September.

Stocks moved sharply higher over the course of the trading session on Monday, with technology stocks seeing a significant rebound following last week’s sell-off. The tech-heavy Nasdaq posted a standout gain, although all three major averages moved to the upside on the day.

The major averages moved roughly sideways going into the close, hovering near their best levels of the day. The Nasdaq surged 280.63 points or 1.6 percent to 18,007.57, the S&P 500 jumped 59.41 points or 1.1 percent to 5,564.41 and the Dow rose 127.91 points or 0.3 percent to 40,415.44.

The strength on Wall Street came as tech stocks regained ground following the steep drop seen last week, which saw the Nasdaq plunge by 3.7 percent.

AI darling and tech sector leader Nvidia (NVDA) helped lead the way back to the upside, spiking by 4.8 percent after plummeting by 8.8 percent last week.

The advance by Nvidia contributed to considerable strength among semiconductor stocks, with the Philadelphia Semiconductor Index soaring by 4.0 percent after ending last Friday’s trading at its lowest closing level in well over a month.

Considerable strength was also visible among computer hardware stocks, as reflected by the 1.8 percent jump by the NYSE Arca Computer Hardware Index.

Software stocks also saw significant strength, while tobacco, brokerage and housing stocks turned in strong performances outside the tech sector.

Stocks also moved higher after President Joe Biden announced his decision to drop out of the presidential race and endorsed his Vice President Kamala Harris.

Biden has been under pressure to step aside after his disastrous debate performance raised questions about his fitness to serve another term as president.

While Republican nominee Donald Trump is seen as a more pro-business candidate, his return to the White House could also lead to increased trade tensions with China.

“The market appears to have welcomed Joe Biden’s withdrawal from the presidential race,” said Dan Coatsworth, investment analyst at AJ Bell.

“However, there is still a lot of uncertainty until the new Democratic candidate is confirmed,” he added. “That means we could see heightened volatility over the next few weeks, with assets quickly changing direction depending on the latest comments from Washington.”

Commodity, Currency Markets

Crude oil futures are falling $0.55 to $77.85 a barrel after slipping $0.24 to $78.40 a barrel on Monday. Meanwhile, after edging down $4.40 to $2,394.70 an ounce in the previous session, gold futures are climbing $12.90 to $2,407.60 an ounce.

On the currency front, the U.S. dollar is trading at 156.03 yen compared to the 157.04 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0858 compared to yesterday’s $1.0891.

Asia

Asian stocks ended mixed on Tuesday, with mainland China and Hong Kong markets retreating after China’s third plenum communique failed to address key economic issues.

Markets elsewhere mostly rose as semiconductor shares rebounded ahead of big earnings from U.S. tech companies, with Tesla and Google set to report their financial results later in the day.

The dollar index held firm after reports that U.S. Vice President Kamala Harris has secured enough Democratic delegates to clinch the party’s nomination for president.

Investors also awaited U.S. GDP and inflation readings this week for additional clues on the rate trajectory.

Gold dipped below $2,400 per ounce, while oil prices were little changed after falling for the past two sessions.

China’s Shanghai Composite Index slumped 1.7 percent to 2,915.37 on concerns about a weakening economy and growing Sino-U.S. tensions.

Hong Kong’s Hang Seng Index dropped 0.9 percent to 17,469.36 as a surprise interest-rate cut on Monday by China’s central bank put the spotlight on the country’s economic weakness.

Japanese markets ended little changed, while the yen strengthened ahead of the Bank of Japan’s policy meeting next week, with no change in interest rates expected.

The Nikkei 225 Index finished marginally lower at 39,594.39, extending losses to a fifth straight session. The broader Topix Index closed 0.2 percent higher at 2,833.39.

Shipping company Nippon Yusen surged 8.2 percent after raising its fiscal year earnings forecast. Peers Kawasaki Kisen Kaisha and Mitsui O.S.K. Lines jumped 6.4 percent and 5.3 percent, respectively. Tech stocks rallied, with chip-testing equipment maker and Nvidia supplier Advantest gaining 2.9 percent.

Seoul stocks eked out modest gains, with the Kospi rising 0.4 percent to 2,774.29. Internet conglomerate Kakao Corp plunged 5.4 percent after its founder was arrested for alleged stock price rigging during his company’s takeover of a major K-pop agency last year.

Australian markets advanced to snap a three-day losing streak as tech stocks rebounded from recent string of losses. Iress and WiseTech Global rallied over 2 percent each.

The benchmark S&P/ASX 200 Index rose half a percent to 7,971.0, while the broader All Ordinaries Index settled 0.5 percent higher at 8,208.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index jumped 0.9 percent to 12,425.58 after Warehouse Group confirmed it had received an unsolicited proposal from Adamantem Capital Management to acquire the company for $1.50 to $1.70 per share.

Europe

European stocks are turning in a mixed performance on Tuesday as miners decline on Chinese demand concerns, offsetting gains in the technology sector following robust earnings from SAP and Logitech.

Upcoming U.S. economic data and earnings from Tesla Inc. and Alphabet Inc. also remain in the spotlight.

While the German DAX Index has jumped by 1.0 percent, the French CAC 40 Index is just below the unchanged line and the U.K.’s FTSE 100 Index is down by 0.2 percent.

Miners Anglo American, Antofagasta and Glencore dropped 1-2 percent, tracking a fall in copper prices on China demand concerns.

Water firm Pennon Group slipped 1.1 percent and United Utilities shed 0.6 percent after Britain’s Environment Agency announced further plans to increase company compliance checks and quadruple inspections.

Caterer Compass jumped more than 5 percent after upgrading its full-year profit and revenue guidance.

Hikma Pharma dropped 1.2 percent. The company announced that its unit Hikma Pharmaceuticals USA, Inc. is extending recall of one lot of Acetaminophen Injection, 1000mg/100mL, (10mg/mL) bags to the consumer/user level.

Swiss computer parts maker Logitech International rallied 2.3 percent after raising its full-year sales and profit outlook.

SAP, Europe’s largest software maker, surged 6.5 percent after adjusted profit for the second quarter came in above expectations.

Porsche AG slumped 4.2 percent. The luxury car maker cut its full-year revenue forecast and warned of impairments in production spurred by a supply shortage.

Alfa Laval AB, a specialty industrial machinery company, gained 1 percent after reporting a rise in Q2 earnings and sales.

Thales, Europe’s largest defense electronics company, plunged 4.7 percent despite reporting slightly better-than-expected half-year operating profit.

U.S. Economic News

The National Association of Realtors is scheduled to release its report on existing home sales in the month of June at 10 am ET. Existing home sales are expected to decrease to an annual rate of 3.99 million in June after falling to a rate of 4.11 million in May.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $69 billion worth of two-year notes.