U.S. Stocks May Extend Yesterday’s Rebound In Early Trading

Stocks may move to the upside in early trading on Tuesday, adding to the strong gains posted in the previous session. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.3 percent.

Traders may continue to pick up stocks at somewhat reduced levels, as the major averages remain well off their recent highs even after yesterday’s rally.

Optimism about the outlook for interest rates may also generate continued buying interest ahead of the Federal Reserve’s monetary policy meeting next week.

The Fed is almost universally expected to begin lowering interest rates but there is some debate about the size of the rate cut.

CME Group’s FedWatch Tool is currently indicating a 73 percent chance the Fed will lower rates by 25 basis points and a 27 percent chance of a 50 basis point rate cut.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of closely watched inflation data in the coming days.

The Labor Department is scheduled to release reports on consumer and producer price inflation in the month of August on Wednesday and Thursday, respectively.

The reports are expected to show slowdowns by the rates of consumer and producer price growth compared to the same month a year ago.

Following the sell-off seen in the previous week, stocks showed a strong move back to the upside during trading on Monday. The major averages all moved sharply higher over the course of the session.

The major averages pulled back off their highs of the session in afternoon trading but remained firmly positive. The Dow surged 484.18 points or 1.2 percent to 40,829.59, the Nasdaq jumped 193.77 points or 1.2 percent to 16,884.60 and the S&P 500 shot up 62.63 points or 1.2 percent to 5,471.05.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while China’s Shanghai Composite Index rose by 0.3 percent.

The major European markets have also turned mixed on the day. While the French CAC 40 Index is up by 0.3 percent, the German DAX Index is down by 0.4 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

In commodities trading, crude oil futures are sliding $0.78 to $67.93 a barrel after jumping $1.04 to $68.71 a barrel on Monday. Meanwhile, after climbing $8.10 to $2,532.70 an ounce in the previous session, gold futures are inching up $3.30 to $2,536 an ounce.

On the currency front, the U.S. dollar is trading at 142.84 yen compared to the 143.18 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1032 compared to yesterday’s $1.1035.