U.S. Stocks May Move Modestly Higher In Early Trading

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

Optimism the U.S. economy may be able to avoid a recession may contribute to early strength on Wall Street after the Commerce Department released a report showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of May.

The Commerce Department said durable goods orders shot up by 1.7 percent in May after jumping by an upwardly revised 1.2 percent in April.

Economists had expected durable goods orders to slump by 1.0 percent compared to the 1.1 percent advance that had been reported for the previous month.

Excluding a surge in orders for transportation equipment, durable goods orders climbed by 0.6 percent in May after falling by a revised 0.6 percent in April.

Ex-transportation orders were expected to edge down by 0.1 percent compared to the 0.2 percent dip that had been reported for the previous month.

Buying interest may remain somewhat subdued, however, as traders continue to express concerns about the outlook for interest rates.

Later in the week, the Commerce Department is due to release its report on personal income and spending in the month of May, which includes a reading on inflation said to be preferred by the Federal Reserve.

The consumer price inflation data could significantly impact opinions regarding whether the Fed will follow through on its forecast interest rate hikes.

U.S. stocks closed mostly lower on Monday, with stocks in the technology sector suffering sharp losses. Worries about tighter monetary policies and the impact of higher rates on economic growth weighed on the markets.

The major averages all closed in the red. The Dow edged down 12.72 points or less than a tenth of a percent to 33,714.71, and the S&P 500 drifted down 19.51 points or 0.5 percent to 4,328.82, while the Nasdaq ended down 156.74 points or 1.2 percent at 13,335.78.

Shares of Tesla (TSLA) lost more than 6 percent following a rating downgrade by Goldman Sachs.

Microsoft (MSFT), Visa (V), Merck (MRK), Salesforce.com (CRM), Johnson & Johnson (JNJ) and Amgen (AMGM) lost 1 to 2 percent.

Meanwhile, Home Depot (HD) climbed about 2.5 percent. Nike (NKE) surged 2 percent ahead of earnings. Chevron (CVX), Verizon (VZ), Intel (INTC), Honeywell International (HON) and Caterpillar (CAT) gained 1 to 1.8 percent.

Pacwest (PACW) rallied about 4 percent, buoyed by an announcement from the company that it will be selling a $3.5 billion lender finance loan portfolio to Ares Management.

Commodity, Currency Markets

Crude oil futures are slumping $0.98 to $68.39 a barrel after rising $0.21 to $69.37 a barrel on Monday. Meanwhile, after inching up $4.20 to $1,933.80 an ounce in the previous session, gold futures are edging up $4.30 to $1,938.10 an ounce.

On the currency front, the U.S. dollar is trading at 143.48 yen compared to the 143.51 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0964 compared to yesterday’s $1.0906.

Asia

Asian stocks ended mixed on Tuesday as geopolitical concerns surrounding Russia eased somewhat and China’s premier said growth is accelerating in the world’s second-largest economy.

In a late-night televised speech, Russian President Vladimir Putin accused Ukraine and its Western allies of deliberately provoking Russians to turn against each other during the recent short-lived mutiny led by mercenaries of the Wagner group.

Wagner Chief Yevgeny Prigozhin also said that his intention was not to dethrone the Putin government.

Elsewhere, Premier Li Qiang, China’s No. 2 leader, said today that economic growth accelerated in the latest quarter and could hit the official target of 5 percent for the year.

Chinese shares climbed after Bloomberg reported U.S. Treasury Secretary Janet Yellen plans to visit China in early July for high-level economic talks.

The benchmark Shanghai Composite Index settled 1.2 percent higher at 3,189.44 ahead of industrial profits, manufacturing and non-manufacturing data due this week, which could provide hints for further stimulus to bolster growth. Property stocks rallied on news of a potential buyout of a developer.

Hong Kong’s Hang Seng Index jumped 1.9 percent to 19,148.13 after five consecutive sessions of losses. Tech stocks soared despite Wall Street’s tech sell-off overnight.

Japanese shares fell for a fourth straight session as tech stocks followed their U.S. peers lower on concerns about interest rates staying higher for longer.

The Nikkei 225 Index shed 0.5 percent to close at 32,538.33, after having surged to a 33-year high last week. The broader Topix Index ended down 0.3 percent at 2,253.81.

Softbank Group, Advantest and CyberAgent fell 2-4 percent. Shipping stocks outperformed, with Kawasaki Kisen Kaisha rallying more than 11 percent, while Nippon Yusen and Mitsui OSK Lines rose 3-4 percent.

Seoul stocks cut early losses to finish marginally lower, with the Kospi ending down 0.81 point at 2,581.39 ahead of Fed Chair Jerome Powell’s remarks at a forum this week.

Auto stocks bucked the weak trend, with Hyundai Motor and Hyundai Mobis climbing 2.7 percent and 4.1 percent, respectively.

Australian markets advanced to snap a four-day losing streak as investors awaited inflation and retail sales data due later in the week for clues to the RBA’s rate moves in August.

The benchmark S&P/ASX 200 Index gained 0.6 percent to close at 7,118.20, while the broader All Ordinaries Index ended 0.5 percent higher at 7,300, led by banks and miners.

Medibank lost 3.9 percent after Australia’s banking regulator told the insurer that it would have to set aside $167 million in extra capital following a data breach.

Europe

European stocks have struggled for direction on Tuesday, even as miners and financials rally after Chinese Premier Li Qiang said growth has picked up this quarter and more stimulus was in store.

The euro has edged up after European Central Bank President Christine Lagarde said today that the central bank is committed to attain the 2 percent inflation target.

“Monetary policy currently has only one goal: to return inflation to our 2 percent medium-term target in a timely manner,” Lagarde said in a speech at an ECB forum in Sintra, Portugal. “And we are committed to reaching this goal come what may.”

Without any material change to the euro area outlook, the bank will continue to increase rates in July, Lagarde reiterated.

Currently, the U.K.’s FTSE 100 Index is down by 0.2 percent, while the French CAC 40 Index and the German DAX Index are both down by 0.3 percent.

Antofagasta and BHP have shown strong moves to the upside as metal prices rise on optimism over Chinese growth.

Fintech company Wise has soared after reporting a surge in annual profit in the financial year that ended March 31.

Prosus NV has also jumped after the e-commerce investor and its parent Naspers Ltd. received approval from South African regulators to remove a cross-holding structure.

On the other hand, JD Sports Fashion has plunged after the retailer reported a slowdown in sales growth in May.

Sanofi has also fallen in Paris despite reporting positive results from its phase 2B study of Amlitelimab in adults with moderate-to-severe Atopic Dermatitis.

Automobile Major Porsche Automobil Holding SE has also declined. The company has signed a 5-year revolving credit facility of 2.5 billion euros with a view to further strengthening Porsche’s liquidity position.

U.S. Economic Reports

Reflecting a continued spike in orders for transportation equipment, the Commerce Department released a report on Tuesday showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of May.

The Commerce Department said durable goods orders shot up by 1.7 percent in May after jumping by an upwardly revised 1.2 percent in April.

Economists had expected durable goods orders to slump by 1.0 percent compared to the 1.1 percent advance that had been reported for the previous month.

Excluding the surge in orders for transportation equipment, durable goods orders climbed by 0.6 percent in May after falling by a revised 0.6 percent in April.

Ex-transportation orders were expected to edge down by 0.1 percent compared to the 0.2 percent dip that had been reported for the previous month.

At 9 am ET, Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of April.

The Commerce Department is due to release its report on new home sales in the month of May at 10 am ET. New home sales are expected to dip to an annual rate of 675,000 in May after surging to a rate of 683,000 in April.

Also at 10 am ET, the Conference Board is scheduled to release its report on consumer confidence in the month of June. The consumer confidence index is expected to climb to 103.7 in June from 102.3 in May.

The Treasury Department is due to announce the results of this month’s auction of $43 billion worth of five-year notes at 1 pm ET.

Stocks In Focus

Shares of Lordstown Motors (RIDE) are plummeting in pre-market trading after the electric truck maker filed for Chapter 11 bankruptcy protection.

Drugstore chain Walgreens Boots Alliance (WBA) may also come under pressure after reporting weaker than expected fiscal third quarter earnings and lowering its full-year earnings guidance.

Meanwhile, shares of Kellogg (K) are likely to see initial strength after Goldman Sachs upgraded its rating on the company’s stock to Buy from Neutral.