U.S. Stocks May Move Back To The Upside In Early Trading

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

Traders may look to pick up stocks at somewhat reduced levels following the steep drop seen during trading on Monday.

Overall trading activity is likely to remain somewhat subdued, however, as traders look ahead to the release of key inflation data in the coming days.

U.S. stocks fell on Monday amid easing prospects of aggressive rate cuts by the Federal Reserve following a much higher than expected addition in U.S. non-payroll employment in the month of September.

Investors also awaited earnings announcements from major banks and some crucial economic data, including readings on consumer price and producer price inflation.

The major averages all closed notably lower. The Dow tumbled 398.51 points or 0.9 percent to 41,954.24, the S&P 500 closed down 55.13 points or 1.0 percent at 5,695.94, while the Nasdaq recorded a more pronounced drop, falling by 213.95 points or 1.2 percent to settle at 17,923.90.

After Friday’s upbeat jobs data, traders now expect only a quarter-point cut in interest rates at the Federal Reserve’s next policy announcement on November 7, with a small chance that the policy rate stays unchanged.

On the geopolitical front, Israeli defense forces intensified air strikes targeting Gaza and the Lebanese capital of Beirut simultaneously on the first anniversary of Hamas’ cross-border attack in Israel, which triggered the Middle East war.

Dozens were killed in air strikes on a mosque and a now defunct school, which were converted as refugee relief shelters Sunday, according to Gaza’s Hamas-run health ministry. The Israeli military says Hamas militants were hiding there.

Apple Inc., Microsoft Corporation, Alphabet, Amazon, Meta Platform, Berkshire Hathaway, Tesla, Walmart, Visa, Procter & Gamble, Netflix, Coca-Cola, Salesforce, Merck, Accenture, Walt Disney, Nike, KKR and ADP lost 1 to 4 percent.

Pfizer climbed more than 2 percent. Abott, IBM, Eli Lilly & Co., NVIDIA Corporation and Exxon Mobil also closed higher.

Commodity, Currency Markets

Crude oil futures are tumbling $1.51 to $75.63 a barrel after surging $2.76 to $77.14 a barrel on Monday. Meanwhile, after edging down $1.80 to $2,666 an ounce in the previous session, gold futures are slipping $3.20 to $2,662.40 an ounce.

On the currency front, the U.S. dollar is trading at 148.03 yen compared to the 148.18 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0975 compared to yesterday’s $1.0976.

Asia

Asian stocks declined on Tuesday, with Hong Kong markets leading regional losses as China’s National Development and Reform Commission pledged more measures to boost the Chinese economy but gave little in the way of details.

The dollar consolidated near a seven-week high while gold edged down slightly after a Federal Reserve official urged a cautious path on interest-rate cuts.

Investors looked ahead to key U.S. inflation readings and the release of the Fed’s latest meeting minutes this week for additional clues on the Fed’s rate trajectory.

Oil prices were down nearly 2 percent in Asian trading after recent strong gains.

Chinese markets rallied as trading resumed after a weeklong holiday. The benchmark Shanghai Composite Index ended up 4.6 percent at 3,489.78, giving up some early gains.

Hong Kong’s Hang Seng Index plummeted 9.4 percent to 20,926.79 as a highly anticipated announcement on plans to boost China’s ailing economy disappointed investors.

Japanese markets tumbled as better-than-expected Japanese household spending data lifted demand for yen and dampened exporters’ shares.

The Nikkei 225 Index dropped 1 percent to 38,937.54, snapping a three-day winning streak. The broader Topix Index settled 1.5 percent lower at 2,699.15. Technology startup investor SoftBank Group fell 1.9 percent to drag the Nikkei index the most.

Seoul stocks ended lower due to Middle East concerns and uncertainty around the Fed rate path. The Kospi fell 0.6 percent to 2,594.36.

Australian markets ended lower, dragged down by mining and tech stocks. The benchmark S&P/ASX 200 Index slipped 0.4 percent to 8,176.90, while the broader All Ordinaries Index closed 0.4 percent lower at 8,443.70.

Regenerative medicine company Orthocell soared 7.3 percent after receiving regulatory approval to commence sales of its nerve repair product, Remplir in Singapore.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slid 0.3 percent to close at 12,555.99.

Europe

European stocks have dropped to two-week lows on Tuesday as Middle East worries persisted and China’s state planner announced no new plans for major stimulus.

Traders ignored positive data that showed German industrial production expanded more than expected in August after falling in the previous month.

Data from Destatis revealed that German industrial output grew 2.9 percent on month in August, reversing a revised 2.9 percent decline in July. Economists had expected a 0.8 percent rebound for the month.

On a yearly basis, industrial production logged a 2.7 percent drop, slower than the 5.6 percent decrease in July.

The pan European STOXX 600 fell 0.7 percent to 515.64 after edging up 0.2 percent on Monday.

The German DAX dipped half a percent, France’s CAC 40 shed nearly 1 percent and the U.K.’s FTSE 100 was down 1.2 percent.

Miners suffered heavy losses, tracking lower copper and iron ore prices as initial optimism over top consumer China’s stimulus measures faded. Anglo American, Antofagasta and Glencore lost 4-6 percent.

China-linked luxury brands such as Kering, LVMH and Hermes International tumbled 3-7 percent in Paris.

Spirits maker Remy Cointreau plummeted 9.3 percent and Pernod Ricard lost 4.3 percent as China imposed temporary anti-dumping measures on brandy imports from the European Union.

British engineering firm and aerospace parts maker Senior plummeted 13 percent after a profit warning due to challenges in the aerospace market.

Vistry plunged 28 percent after the homebuilder slashed its fiscal 2024 profit outlook.

Imperial Brands rallied 3.5 percent after the maker of Winston cigarettes reported trading in line with expectations for fiscal 2024.

Deutz AG, a German internal combustion engine maker, edged up slightly after saying that as part of its cost-cutting measures due to the “difficult economic situation”, it is considering job cuts.

Nordex SE, a wind turbine maker, advanced 2.4 percent after saying it has received orders from Canada for 74 N163 turbines with 500 MW capacity from an undisclosed party.

U.S. Economic News

With exports surging and imports falling, the Commerce Department released a report on Tuesday showing the U.S. trade deficit narrowed in the month of August.

The Commerce Department said the trade deficit shrank to $70.4 billion in August from a revised $78.9 billion in July.

Economists had expected the trade deficit to decrease to $70.6 billion from the $78.8 billion originally reported for the previous month.

The narrower trade deficit came as the value of imports shot up by 2.0 percent to $271.8 billion, while the value of imports decreased by 0.9 percent to $342.2 billion.

At 12:45 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to give remarks and participate in a moderated conversation on the economic outlook before the Atlanta consular corps luncheon.

The Treasury Department is due to announce the results of this month’s auction of $58 billion worth of three-year notes at 1 pm ET.

At 4 pm ET, Boston Federal Reserve President Susan Collins is scheduled to speak before the 23rd annual Regional & Community Bankers Conference.

Federal Reserve Vice Chair Philip Jefferson is due to participate in “The Discount Window, 1913-2000” conversation hosted by Davidson College at 7:30 pm ET.