U.S. Stocks May Lack Direction During Abbreviated Session

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 after ending the previous session mostly higher.

Many traders are likely to be away from their desks ahead of the Christmas Day holiday on Wednesday, leading to below average volume.

The markets are also scheduled to close earlier than usual this afternoon, which is likely to keep some traders on the sidelines.

A lack of major U.S. economic data may also contribute to light trading, as the release of reports on durable goods orders and new home sales was pushed forward to Monday after President Joe Biden signed an executive closing the federal government for Christmas Eve.

After showing a lack of direction early in the session, stocks moved mostly higher over the course of the trading day on Monday. The major averages added to the strong gains posted on Friday, further offsetting the sell-off seen last Wednesday.

The Nasdaq and the S&P 500 climbed firmly into positive territory as the day progressed, while the narrower Dow posted a more modest gain.

The Nasdaq jumped 192.29 points or 1.0 percent to 19,764.89, the S&P 500 climbed 43.22 points or 0.7 percent to 5,974.07 and the S&P 500 rose 66.69 points or 0.2 percent to 42,906.95.

The advance by the tech-heavy Nasdaq came amid a rally by semiconductor stocks, with the Philadelphia Semiconductor Index surging by 3.1 percent.

Significant strength was also visible among computer hardware stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Computer Hardware Index.

Outside the tech sector, pharmaceutical stocks turned in a strong performance on the day, driving the NYSE Arca Pharmaceutical Index up by 2.1 percent.

Overall trading activity was somewhat subdued, however, as traders seemed reluctant to make more significant moves amid what is likely to be a relatively quiet week due to the Christmas Day holiday on Wednesday.

Uncertainty about the near-term outlook for the markets may also have kept some traders on the sidelines following the volatility seen last week.

On the U.S. economic front, the Commerce Department released a report showing new orders for U.S. manufactured durable goods slumped by much more than expected in the month of November.

The report said durable goods orders tumbled by 1.1 percent in November after climbing by an upwardly revised 0.8 percent in October.

Economists had expected durable goods orders to fall by 0.4 percent compared to the 0.3 percent increase that had been reported for the previous month.

Excluding a steep drop by orders for transportation equipment, durable goods orders edged down by 0.1 percent in November after inching up by 0.2 percent in October. Ex-transportation orders were expected to rise by 0.3 percent.

Meanwhile, the report said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, climbed by 0.7 percent in November after dipping by 0.1 percent in October.

A separate report released by the Conference Board showed an unexpected deterioration by consumer confidence in the month of December.

The Conference Board said its consumer confidence index tumbled to 104.7 in December from an upwardly revised 112.8 in November.

The pullback surprised economists, who had expected the consumer confidence index to rise to 113.0 from the 111.7 originally reported for the previous month.

Commodity, Currency Markets

Crude oil futures are climbing $0.53 to $69.77 a barrel after slipping $0.22 to $69.24 a barrel on Monday. Meanwhile, after falling $16.90 to $2,628.20 an ounce in the previous session, gold futures are edging down $1.30 to $2,626.90 an ounce.

On the currency front, the U.S. dollar is trading at 157.15 yen compared to the 157.17 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0395 compared to yesterday’s $1.0405.

Asia

Asian stocks advanced on Tuesday after shares of big U.S. technology companies rallied overnight in thin trading at the start of a holiday-shortened week.

Regional markets moved in a tight range before ending higher, with Hong Kong and Sydney having shortened sessions for Christmas Eve.

Gold and oil clung to modest gains in Asian trading despite a firmer dollar and elevated bond yields.

Chinese and Hong Kong markets rallied after the Finance Ministry announced the government would increase public spending with a greater focus on promoting domestic demand growth next year.

China’s Shanghai Composite Index surged 1.3 percent to 3,393.53, while Hong Kong’s Hang Seng Index jumped 1.1 percent to 20,098.29.

Japanese markets ended lower as Finance Minister Katsunobu Kato reiterated Tokyo’s discomfort over excessive foreign exchange moves.

Meanwhile, the Bank of Japan meeting minutes revealed that policymakers agreed in October to keep raising interest rates if the economy moves in line with their forecast.

The Nikkei 225 Index dipped 0.3 percent to 39,036.85, while the broader Topix Index settled marginally higher at 2,727.26. Heavyweights SoftBank and Fast Retailing fell 1.4 percent and 0.6 percent, respectively.

Honda Motor soared 12.2 percent, Nissan Motor jumped 6 percent and Mitsubishi spiked 7.2 percent after an announcement that they have officially begun discussions for a potential merger of the three.

Seoul stocks ended little changed amid persistent concerns over political turmoil in the country. Investors also reacted to data that showed South Korea’s consumer sentiment dropped sharply this month to hit the weakest level in more than two years.

The Kospi finished marginally lower at 2,440.52 after the country’s main opposition party said it will start impeachment proceedings against Prime Minister and Acting President Han Duck-soo.

Australian markets eked out modest gains and the Aussie dollar stayed on the defensive amid speculation that the Reserve Bank of Australia will begin rate cuts in February.

The RBA’s December 9-10 meeting revealed that the board had grown more confidence about inflation and that it would be appropriate to start easing policy restrictions if future data aligns with or falls below forecasts.

The benchmark S&P/ASX 200 Index edged up by 0.2 percent to 8,220.90, led by gains in the tech and energy sectors. The broader All Ordinaries Index rose 0.2 percent to 8,471.50.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index closed up 0.7 percent at 13,074.74.

Europe

European stocks edged higher in cautious trading on Tuesday ahead of the Christmas break. The German markets were closed today, while the U.K. and French markets closed early for Christmas Eve.

Markets in the U.K., Germany, Spain and France will remain closed on Wednesday and Thursday for the Christmas holiday.

The pan European STOXX 600 Index rose 0.2 after closing 0.1 percent higher on Monday. France’s CAC 40 Index inched up by 0.1 percent while the U.K.’s FTSE 100 climbed 0.4 percent.

Energy stocks tracked oil prices higher, with BP Plc edging up 0.1 percent and peer Shell gaining 0.8 percent in London.

Vistry Group slumped as the homebuilder issued its third profit warning of the year, citing delays to expected year-end transactions and completions.

AstraZeneca edged up slightly. Following feedback from the European Medicines Agency, the British pharma company and Japan’s Daiichi Sankyo have decided to voluntarily withdraw the marketing authorization application in the European Union for advanced lung-cancer treatment Dato-DXd.

U.S. Economic News

The Treasury Department is scheduled to announce the results of this month’s auction of $70 billion worth of five-year notes at 11:30 am ET.