U.S. Stocks May Continue To Experience Choppy Trading

After ending yesterday’s choppy trading session little changed, stocks may continue to show a lack of direction in early trading on Tuesday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures down by less than a tenth of a percent.

Traders may remain reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but the accompanying statement could have a significant impact on the outlook for the central bank’s next decision in September.

With Fed officials repeatedly saying they need “greater confidence” inflation is slowing before cutting rates, recent inflation data has led to optimism about a September rate cut.

According to CME Group’s FedWatch Tool, there is currently a 91.6 percent chance the Fed will lower rates by a quarter point in September and an 8.3 percent chance of a half point rate cut.

Traders may also stick to sidelines ahead of the release of earnings news from companies like Microsoft (MSFT), Advanced Micro Devices (AMD) and Starbucks (SBUX) after the close of today’s trading.

Meanwhile, a steep drop by shares of Procter & Gamble (PG) may weigh on the Dow, with the consumer products giant plunging by 5.6 percent in pre-market trading.

The slump by Procter & Gamble comes after the company reported second quarter earnings that beat analyst estimates but weaker than expected revenues.

Fellow Dow component Merck (MRK) may also come under pressure after the drug giant reported better than expected second quarter results but provided disappointing full-year earnings guidance.

On the other hand, rival drug giant Pfizer (PFE), which was removed from the Dow back in 2020, is likely to see initial strength after reporting second quarter results that beat expectations and raising its full-year outlook.

Stocks moved to the upside early in the session on Monday but showed a lack of direction over the course of the trading day. The major averages spent the day bouncing back and forth across the unchanged line after posting strong gains last Friday.

The major averages eventually ended the session narrowly mixed. While the Dow edged down 49.41 points or 0.1 percent to 40,539.93, the Nasdaq inched up 12.32 points or 0.1 percent to 17,370.20 and the S&P 500 crept up 4.44 points or 0.1 percent to 5,463.54.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday. Hong Kong’s Hang Seng Index tumbled by 1.4 percent and South Korea’s Kospi slumped by 1.0 percent, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.2 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.2 percent, the French CAC 40 Index and the German DAX Index are both up by 0.4 percent.

In commodities trading, crude oil futures are falling $0.39 to $75.42 a barrel after slumping $1.35 to $75.81 a barrel on Monday. Meanwhile, after edging down $3.20 to $2,377.80 an ounce in the previous session, gold futures are inching up $6.50 to $2,384.30 an ounce.

On the currency front, the U.S. dollar is trading at 154.96 yen compared to the 154.02 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0803 compared to yesterday’s $1.0821.

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