Futures Pointing To Roughly Flat Open On Wall Street

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 moving sharply higher over the two previous sessions.

Traders may be reluctant to make significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 153,000 jobs in January after rising by 199,000 jobs in December. The unemployment rate is expected to hold at 3.9 percent.

The strength of the monthly jobs data could impact expectations regarding how fast the Federal Reserve will raise rates from near-zero levels in an effort to fight inflation.

Payroll processor ADP’s report on private sector employment will provide an early look at the strength of the labor market on Wednesday.

Among individual stocks, shares of UPS (UPS) are moving sharply higher in pre-market trading after the delivery giant reported better than expected fourth quarter results, provided upbeat guidance and raised its dividend.

Energy giant ExxonMobil (XOM) may also move to the upside after reporting fourth quarter earnings that beat analyst estimates and announcing a new $10 billion share repurchase program.

Meanwhile, shares of AT&T (T) may come under pressure after the telecom giant announced plans to spin off its interest in WarnerMedia in connection with the media and entertainment company’s merger with Discovery (DISCA). AT&T subsequently plans to cut its annual dividend nearly in half.

Stocks moved sharply higher over the course of the trading day on Monday, extending the rally seen during trading last Friday. Tech stocks helped lead the continued advance on Wall Street, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages all posted notable gains, although the Nasdaq still outperformed its counterparts. While the Nasdaq soared 469.31 points or 3.4 percent to 14,239.88, the Dow jumped 406.39 points or 1.2 percent to 35,131.86 and the S&P 500 surged 83.70 points or 1.9 percent to 4,515.55.

Despite the strong upward move seen over the last two sessions of January, the major averages posted steep losses for the first month of the year. The Nasdaq and the S&P 500 plunged by 8.9 percent and 5.2 percent, respectively, recording their worst months since March of 2020.

The strength on Wall Street came as traders continued to pick up tech stocks at reduced levels, with the Nasdaq bouncing further off the eight-month closing low set last Thursday.

Positive analyst comments contributed to the strength in the tech sector, with Netflix (NFLX), Tesla (TSLA) and Spotify (SPOT) all posting strong gains following upgrades.

Netflix and Spotify were both upgraded to Buy from Neutral by Citi, while Credit Suisse raised its rating on Tesla’s stock to Outperform from Neutral.

Semiconductor stocks helped to lead the rally by the tech sector, driving the Philadelphia Semiconductor Index up by 5.4 percent.

The index continued to regain ground after hitting its lowest intraday level in over six months before rebounding last Friday.

The strength in the tech sector also reflected significant advances by networking, biotechnology and computer hardware stocks.

Substantial strength was also visible among airline stocks, with the NYSE Arca Airline Index soaring by 5.2 percent on the day.

Retail, gold and brokerage stocks also saw notable strength, while oil service stocks bucked the uptrend despite a sharp increase by the price of crude oil.

Commodity, Currency Markets

Crude oil futures are falling $0.47 to $87.68 a barrel after jumping $1.33 to $88.15 a barrel on Monday. Meanwhile, after climbing $9.80 to $1,796.40 an ounce in the previous session, gold futures are rising $7.80 to $1,804.20 an ounce.

On the currency front, the U.S. dollar is trading at 114.73 yen compared to the 115.11 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1255 compared to yesterday’s $1.1235.

Asia

Asian stocks rose in thin trading on Tuesday, with the Chinese, Hong Kong and South Korean markets closed for the Chinese New Year break.

Underlying sentiment was supported after the Wall Street put up a strong show overnight, led by gains by technology stocks.

Japanese shares finished modestly higher after data showed manufacturing activity in the country grew at the fastest pace in nearly eight years in January and unemployment unexpectedly fell in December.

The Nikkei 225 Index edged up 76.50 points, or 0.3 percent, to 27,078.48 after rising as much as 1.5 percent earlier in the session. The broader Topix closed marginally higher at 1,896.06.

Tech stocks followed their U.S. peers higher, with Advantest and Tokyo Electron rising 1-2 percent. TDK soared 11.2 percent after the electronic component maker raised its profit outlook for the second time this year.

Shionogi & Co. jumped 10.3 percent after disclosing that its oral antiviral drug for Covid-19 was found to be effective in a study. Retailer Seven & i Holdings climbed 4.4 percent on reports it plans to offload its department unit.

Australian markets eked out modest gains after the country’s central bank left its key rate unchanged at a record low but decided to cease further purchases under its bond purchase program.

Advocating patience on the case for interest rate increases, Reserve Bank governor Philip Lowe said the bank would not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.

The benchmark S&P/ASX 200 Index rose 34.40 points, or 0.5 percent, to 7,006, led by banks and gold miners. The broader All Ordinaries Index ended up 44.50 points, or 0.6 percent, at 7,312.80.

Gold miner Newcrest Mining jumped 3.5 percent and Northern Star Resources added 2.2 percent. Mining heavyweights led losses, with BHP and Rio Tinto falling 2-3 percent.

Building materials maker Boral soared 5.8 percent after announcing it would return A$3 billion to shareholders.

In economic news, Australia’s manufacturing recovery stalled over the Christmas holiday period and retail sales sank in December, while demand for mortgages picked up further in the month, separate reports showed.

Europe

European stocks have advanced on Tuesday following another session of solid gains on Wall Street overnight and data showing acceleration in Eurozone factory activity growth in January. The Eurozone manufacturing PMI was finalized at 58.7 in January, up from December’s 58.0.

Separate data showed German retail sales fell by 5.5 percent on a monthly basis in December, reversing a 0.8 percent increase in November.

While the U.K.’s FTSE 100 Index has jumped by 1.1 percent, the French CAC 40 Index and the German DAX Index are both up by 1.3 percent.

UBS shares have soared as the Swiss bank announced more ambitious profitability goals and a continued plan to pare back costs.

EssilorLuxottica has also jumped in Paris. The maker of ophthalmic lenses, frames, and sunglasses has announced a share repurchase of up to 1.5 million shares, during the period from February 1 to March 31, for a price not exceeding 200 euros per share.

Siltronic AG shares have also surged. The German manufacturer of wafers made of hyperpure silicon said the conditions for the completion of the tender offer by GlobalWafers GmbH have not been fulfilled. The tender offer will not be closed but has expired.

Automaker Stellantis has also shown a notable move to the upside following reports it could cut up to 1,400 jobs in France this year.

Oxford Biomedica has also advanced. The gene and cell therapy company said that Sio Gene Therapies intends to return the global rights for AXO-Lenti-PD, a gene therapy, and cease its ongoing work on Parkinson’s disease using the therapy.

Meanwhile, Sweden’s telecom company Tele2 AB has fallen despite reporting a forecast-beating fourth-quarter net profit and increasing its dividend.

Cineworld has also moved lower after saying it has started discussions with dissenting shareholders of Regal Entertainment Group over a potential rescheduling of the cinema operator’s payment obligations.

U.S. Economic Reports

The Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of January at 10 am ET.

The ISM’s manufacturing PMI is expected to dip to 57.5 in January from 58.7 in December, although a reading above 50 would still indicate growth.

Also at 10 am ET, the Commerce Department is due to release its report on construction spending in the month of December. Construction spending is expected to increase by 0.6 percent.

The Labor Department is also scheduled to release the results of its Job Openings and Labor Turnover Survey for December at 10 am ET. Job openings are expected to edge down to 10.3 million.

Stocks In Focus

Shares of AMC Entertainment (AMC) are moving sharply higher in pre-market trading after the movie theater operator forecast better than expected fourth quarter sales.

Electronics manufacturing services provider Sanmina (SANM) is also likely to see initial strength after reporting fiscal first quarter earnings that beat estimates and providing upbeat guidance.

On the other hand, shares of Cirrus Logic (CRUS) are seeing notable pre-market weakness even though the semiconductor company reported better than expected fiscal third quarter results.