Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to add to the strong gains posted last week.

The markets may benefit from optimism President Donald Trump will take a more lenient approach to tariffs after he refrained from imposing immediate tariffs on his first day back in office.

Stocks showed a strong move to the upside during trading on Friday, with the major averages more than offsetting the losses posted in the previous session. With the upward move, the Dow ended the day at its best closing level in a month.

The major averages pulled back off their best levels in the latter part of the session but remained firmly positive. The Nasdaq surged 291.91 points or 1.5 percent to 19,630.20, the S&P 500 jumped 59.32 points or 1.0 percent to 5,996.66 and the Dow climbed 334.70 points or 0.8 percent to 43,487.83.

The major averages also posted strong gains for the week. The Dow soared by 3.7 percent, while the S&P 500 and the Nasdaq shot up by 2.9 percent and 2.5 percent, respectively.

Stocks may have benefitted from the recent decrease by treasury yields even though the yield on the benchmark ten-year note recovered from an early slump to end the day roughly flat.

The recent retreat by treasury yields came as the U.S. inflation data released over the past few days led to renewed optimism about the outlook for interest rates.

Adding to the interest rate optimism, Federal Reserve Governor Christopher Waller told CNBC the central bank could lower interest rates multiple times this year if inflation eases as he is expecting.

“As long as the data comes in good on inflation or continues on that path, then I can certainly see rate cuts happening sooner than maybe the markets are pricing in,” Waller said during an interview with Sara Eisen on CNBC’s “Squawk on the Street” on Thursday.

Waller said the number of rate cuts would be driven by the data, suggesting the Fed could cut rates three or four times if there is a lot of progress on inflation or cut rates twice or only once if inflation remains sticky.

The strength on Wall Street may also have reflected optimism about the outlook for the markets under President-elect Donald Trump, who is due to be sworn in for the second time on Monday.

Stocks surged in reaction to Trump’s election in November amid expectations of more pro-business policies in the new administration, although there are also concerns about the impact of proposed tariffs.

In U.S. economic news, the Federal Reserve released a report showing industrial production increased by much more than expected in the month of December.

The Fed said industrial production jumped by 0.9 percent in December after rising by a revised 0.2 percent in November.

Economists had expected industrial production to climb by 0.3 percent compared to the 0.1 percent dip originally reported for the previous month.

Semiconductor stocks turned in some of the market’s best performances on the day, driving the Philadelphia Semiconductor Index up by 2.8 percent.

Applied Materials (AMAT) posted a notable gain after KeyBanc Capital Markets upgraded its rating on the company’s stock to Overweight from Sector Weight.

Significant strength was also visible among retail stocks, as reflected by the 1.5 percent gain posted by the Dow Jones U.S. Retail Index.

Banking, brokerage and software stocks also saw notable strength, while pharmaceutical stocks showed a substantial move to the downside.

Commodity, Currency Markets

Crude oil futures are plunging $1.96 to $75.92 a barrel after falling $0.80 to $77.88 a barrel last Friday. Meanwhile, after edging down $2.20 to $2,748.70 an ounce in the previous session, gold futures are slipping $8.10 to $2,740.60 an ounce.

On the currency front, the U.S. dollar is trading at 155.51 yen compared to the 155.62 yen it fetched on Monday. Against the euro, the dollar is valued at $1.0371 compared to yesterday’s $1.0416.

Asia

Asian stocks ended Tuesday’s session on a mixed note as U.S. President Donald Trump announced plans to impose 25 percent tariffs on imports from Canada and Mexico and said tariffs on China could hinge on a deal over TikTok’s ownership.

The dollar fell and gold hit a ten-week high after Trump held off from imposing sweeping trade tariffs in his first day in office and announced a national energy emergency in order to end the inflation crisis.

Oil prices traded mixed in Asian trading in the wake of Trump’s plan to boost oil and gas production in the United States and lower costs for consumers.

China’s Shanghai Composite Index ended marginally lower at 3,242.62 after a choppy session.

Hong Kong’s Hang Seng Index jumped 0.9 percent to 20,106.55, with property developers in focus after Bloomberg reported that officials are taking steps to stabilize operations at China Vanke Co.

Japanese markets eked out modest gains amid expectations the Bank of Japan will raise its key short-term interest rate at the end of a two-day policy meeting later this week.

The Nikkei 225 Index edged up by 0.3 percent to 39,027.98, while the broader Topix index settled marginally higher at 2,713.50.

Seoul stocks ended little changed, with the Kospi finishing marginally lower at 2,518.03 after Trump said he would address unfair trade practices globally.

Battery, chemical and refinery shares underperformed, with SK Innovation, LG Chem and LG Energy Solution falling 4-5 percent.

Australian markets rose notably, lifted by banks and miners. The benchmark S&P/ASX 200 Index climbed 0.7 percent to 8,402.40, while the broader All Ordinaries Index closed up 0.7 percent at 8,652.70.

BHP rose about 1 percent after reporting higher second-quarter production. Wesfarmers advanced 1.6 percent after the top retailer announced plans to shut down its online marketplace, Catch, by the fourth quarter of the 2025 financial year.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index dropped 0.3 percent to 13,052.90.

Europe

European stocks are little changed in cautious trading on Tuesday after U.S. President Donald Trump refrained from imposing immediate tariffs on his first day back in office.

Investors also closely monitored developments at the World Economic Forum taking place this week in Davos, Switzerland.

European Commission President Ursula von der Leyen, Chinese Vice Premier Ding Xuexiang, German Chancellor Olaf Scholz, and Ukrainian President Volodymyr Zelenskyy are among the noteworthy speakers scheduled for today.

The British pound held steady against its major peers after data showed British pay growth stayed stubbornly strong in the three months to November, dampening rate cut hopes.

Banks traded sharply higher in London, with Llyods Banking Group surging 4.7 percent and Barclays adding 1.3 percent.

Essentra, a global supplier of essential components and solutions, dropped 1.1 percent after sharing an update on share buyback.

Kontron AG jumped 4 percent. The technology group said it aims to continue to grow after a jump in sales and earnings last year.

Premier Foods soared almost 6 percent after the food producer forecast its annual profit at the upper end of analysts’ expectations.

French carmaker Renault Group was marginally higher after appointing Duncan Minto as its Chief Financial Officer.

U.S. Economic News

No major U.S. economic data is scheduled to be released today.