Futures Edge Lower Following Disappointing Retail Sales Data

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 after trending higher over the past several sessions.

The futures edged lower following the release of a report from the Commerce Department showing retail sales in the U.S. increased by much less than expected in the month of June.

The Commerce Department said retail sales edged up by 0.2 percent in June after climbing by an upwardly revised 0.5 percent in May.

Economists had expected retail sales to advance by 0.5 percent compared to the 0.3 percent growth originally reported for the previous month.

Excluding a modest increase in sales by motor vehicles and parts dealers, retail sales still rose by 0.2 percent in June after rising by an upwardly revised 0.3 percent in May.

Economists had expected ex-auto sales to increase by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

Any early selling pressure is likely to be relatively subdued, however, as traders also react to upbeat earnings news from Bank of America (BAC) and Morgan Stanley (MS).

Bank of America and Morgan Stanley both reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Following the strong upward move seen last week, stocks saw some further upside during trading on Monday. With the continued advance, the Nasdaq and the S&P 500 once again reached their best closing levels in over a year.

The major averages pulled back off their best levels going into the close but remained in positive territory. The Nasdaq jumped 131.25 points or 0.9 percent to 14,244.95, the S&P 500 climbed 17.37 points or 0.4 percent to 4,522.79 and the Dow rose 76.32 points or 0.2 percent to 34,585.35.

The strength on Wall Street partly reflected recent upward momentum, as encouraging inflation data has added to optimism about the outlook for interest rates ahead of next week’s Federal Reserve meeting.

While the Fed is widely expected to raise rates by another quarter point, traders are hopeful that will mark the final rate hike.

Trading activity remained somewhat subdued, however, as traders looked ahead to the release of some key economic data over the coming days.

Earnings season will also start to pick up steam this week, with a number of big-name companies due to report their quarterly results.

On the U.S. economic front, the New York Federal Reserve released a report showing a pullback in the pace of growth in regional manufacturing activity in the month of July.

The New York Fed said its general business conditions index fell to 1.1 in July after surging to 6.6 in June, although a positive reading still indicates growth. Economists had expected the index to drop to zero.

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 2.3 percent to its best closing level in over a year.

Notable strength also emerged among banking stocks, as reflected by the 1.1 percent gain posted by the KBW Bank Index.

On the other hand, telecom stocks extended last Friday’s sell-off, dragging the NYSE Arca North American Telecom Index down by 4.5 percent to a three-year intraday low.

Shares of A&T (T) plummeted by 4.5percent after Citi downgraded its rating on the telecom giant’s stock to Neutral from Buy.

Commodity, Currency Markets

Crude oil futures are rising $0.28 to $74.41 a barrel after slumping $1.27 to $74.15 a barrel on Monday. Meanwhile, after falling $8 to $1,956.40 an ounce in the previous session, gold futures are climbing $12.80 to $1,969.20 an ounce.

On the currency front, the U.S. dollar is trading at 138.54 yen compared to the 138.71 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.225 compared to yesterday’s $1.1236.

Asia

Asian markets finished trading on a negative note on Tuesday, as lower commodity and iron ore prices weighed on sentiment. Weak GDP data from China continued to impact the commodity price outlook.

Markets also await the earnings updates and forward guidance. Minutes of the Reserve Bank of Australia, which hinted at future hikes, also dampened sentiment.

China’s Shanghai Composite Index dropped 11.81 points or 0.4 percent to finish trading at 3,197.82. The day’s trading ranged between 3,210.25 and 3,190.00. The Shenzhen Component Index fell 37.40 points or 0.3 percent to close at 10,972.96.

The Japanese benchmark Nikkei 225 Index rose 102.63 points or 0.3 percent to end trading at 32,493.89. The day’s trading range was between 32,338.30 and 32,714.59.

Okuma Corp. and JGC Corp. both added more than 3 percent. Amada Co., Eisai Co. and Mizuho Financial Group gained more than 2 percent.

Rakuten Inc. plunged more than 6 percent. Cyber Agent, Toho Co., Z Holdings Corp. and Kao Corp. all shed more than 2 percent.

The Hang Seng Index of the Hong Kong Stock Exchange erased 398.06 points or 2.1 percent from the previous close to finish trading at 19,015.72. The day’s trading range was between a high of 19,324.34 and a low of 18,980.14.

The Korean Stock Exchange’s Kospi Index dropped 11.38 points or 0.4 percent to close trading at 2,607.62. The day’s trading range was between 2,600.67 and 2,626.89.

Australia’s S&P/ASX200 Index closed trading at 7,283.80 after dropping 14.70 points or 0.20 percent. The day’s trading range was between 7,261.10 and 7,298.50.

NRW Holdings surged 5.1 percent. Fintech business The Block also added 2.9 percent. AGL Energy, Graincorp and CSL also rallied more than 2 percent.

Syrah Resources plunged more than 16 percent amidst weak iron ore prices. Ansell dropped more than 14 percent after bleak earnings guidance. Pharma business Imugene and Aurizon Holdings lost more than 5 percent. Lendlease Group lost 4.9 percent.

The NZX 50 Index of the New Zealand Stock Exchange shed 6.11 points or 0.1 percent to close at 11,932.81. Trading ranged between 11,906.17 and 11,944.35.

Sky Network Television, ANZ Group Holdings and Investore Property all rose more than 2 percent. Contact Energy and Stride property followed with gains of more than 1 percent.

Skycity Entertainment Group was the biggest loser, shedding more than 2 percent. Restaurant Brands New Zealand, Fisher & Paykel Healthcare, A2 Milk Company, and Oceania Healthcare all declined more than 1 percent.

Europe

European stocks are roughly flat in lackluster trading on Tuesday, with investors largely refraining from making significant moves, as they await some key economic and earnings updates from the U.S. and major European nations.

While the German DAX Index is down by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both just below the unchanged line.

In the U.K. market, Taylor Wimpey, Persimmon, Melrose Industries, Royal Mail, Barratt Developments and Johnson Matthey are posting standout gains.

Mondi, Hikma Pharmaceuticals, Berkeley Holdings, Ashtead Group and Sainsbury (J) have also moved notably higher.

AstraZeneca has also moved to the upside. The U.S. Food and Drug Administration (FDA) has reportedly approved AstraZeneca and its partner Sanofi’s antibody therapy to prevent respiratory syncytial virus (RSV) in infants and toddlers.

Meanwhile, Polymetal International, Vodafone, BT, Rentokil Initial and Entain have shown notable moves to the downside.

In the German market, Covestro and Vonovia are posting strong gains. BASF, Sartorius, Continental, Bayer, Puma and Fresenius have also advanced.

On the other hand, Deutsche Telekom and Siemens Healthineers have come under pressure, while Henkel, Deutsche Bank and Porsche have also moved lower.

In Paris, Capgemini and WorldLine have moved notably higher. Michelin, Publicis Groupe, Renault, BNP Paribas and Sanofi have also moved to the upside.

At the same time, Orange and L’Oreal have slumped. Hermes International, Essilor and Societe Generale are modestly lower.

In the Swiss market, Novartis is surging after the company raised its full-year earnings guidance and mapped out the planned spin-off of its generic medicines division Sandoz for early in the fourth quarter.

U.S. Economic Reports

A report released by the Commerce Department on Tuesday showed retail sales in the U.S. increased by much less than expected in the month of June.

The Commerce Department said retail sales edged up by 0.2 percent in June after climbing by an upwardly revised 0.5 percent in May.

Economists had expected retail sales to advance by 0.5 percent compared to the 0.3 percent growth originally reported for the previous month.

Excluding a modest increase in sales by motor vehicles and parts dealers, retail sales still rose by 0.2 percent in June after rising by an upwardly revised 0.3 percent in May.

Economists had expected ex-auto sales to increase by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of June. Industrial production is expected to edge down by 0.1 percent in June after slipping by 0.2 percent in May.

The National Association of Home Builders is due to release its report on homebuilder confidence in the month of July at 10 am ET. The housing market index is expected to inch up to 56 in July from 55 in June.

Also at 10 am ET, the Commerce Department is scheduled to release its report on business inventories in the month of May. Business inventories are expected to rise by 0.2 percent.

Stocks In Focus

Shares of Masimo (MASI) are moving sharply lower in pre-market trading after the medical device maker warned of weaker than expected second quarter revenues.

PNC Financial Services (PNC) may also move to the downside after reporting better than expected second quarter earnings but weaker than expected revenues.

Meanwhile, shares Pinterest (PINS) are likely to see initial strength after Evercore ISI upgraded its rating on the social media platform to Outperform from In-Line.