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Nasdaq May Give Back Ground, Dow Poised To See Further Downside
US Market
The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to give back ground following the upward move seen in the previous session.
Traders may look to cash in on yesterday’s gains, which saw the Nasdaq surge to a new record closing high amid a rally by tech stocks.
Meanwhile, the Dow closed lower for the eighth consecutive session on Monday and is poised to see further downside in early trading.
The downward momentum on Wall Street comes as trades look ahead to the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed is widely expected to continue cutting interest rates, with CME Group’s FedWatch Tool currently indicating a 97.1 percent chance the central bank will lower rates by another 25 basis points.
Traders are likely to pay close attention to the Fed’s accompanying statement as well as officials’ latest economic projections, including their forecasts for rates.
Recent data showing inflation remains sticky has led to some worries the Fed will lower rates slower than previously anticipated next year.
Following the lackluster performance seen during last Friday’s session, stocks moved mostly higher during trading on Monday. The tech-heavy Nasdaq led the charge, surging to a new record closing high.
The Nasdaq pulled back off its best levels going into the close but still ended the day up 247.17 points or 1.2 percent at 20,173.89.
The S&P 500 also climbed 22.99 points or 0.4 percent to 6,074.08, while the narrower Dow bucked the uptrend and fell 110.58 points or 0.3 percent to 43,717.48.
The Dow closed lower for the eighth consecutive session, falling to its lowest closing level in almost a month.
The surge by the Nasdaq came amid significant strength among semiconductor stocks, with the Philadelphia Semiconductor Index jumping by 2.1 percent.
Broadcom (NASDAQ:AVGO) extended the surge seen last Friday, while Micron (NASDAQ:MU) also posted a standout gain after JPMorgan said it expects the chipmaker to report strong fiscal first quarter results after the close of trading on Wednesday.
Networking stocks also saw considerable strength, extending a recent upward trend, driving the NYSE Arca Networking Index up by 2.0 percent to a new record closing high.
Tech stocks benefited from optimism about the outlook for interest rates ahead of the Federal Reserve’s monetary policy decision on Wednesday.
Meanwhile, oil stocks moved sharply lower amid a decrease by the price of crude oil, dragging the NYSE Arca Oil Index down by 2.9 percent.
Telecom, oil service and natural gas stocks also saw notable weakness, partly offsetting the strength in the tech sector.
U.S. Economic News
Retail sales in the U.S. increased by more than expected in the month of November, according to a report released by the Commerce Department on Tuesday, with auto sales once again leading the way higher.
The report said retail sales grew by 0.7 percent in November after climbing by an upwardly revised 0.5 percent in October.
Economists had expected retail sales to rise by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.
Excluding a jump in sales by motor vehicles and parts dealers, retail sales edged up by 0.2 percent in November, matching the revised growth in the previous month.
Ex-auto sales were expected to climb by 0.4 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 November. Industrial production is expected to rise by 0.3 percent in November after dipping by 0.3 percent in October.
The National Association of Home Builders is due to release its report on homebuilder confidence in the month of December at 10 am ET. The housing market index is expected to inch up to 47 in December after climbing to 46 in November.
Also at 10 am ET, the Commerce Department is scheduled to release its report on business inventories in the month of October. Business inventories are expected to edge up by 0.1 percent in October, matching the uptick seen in September.
The Treasury Department is due to announce the results of this month’s auction of $13 billion worth of twenty-year bonds at 1 pm ET.
Europe
European stocks hit two-week lows on Tuesday as investors look ahead to a slew of major central bank decisions later in the week and closely watched the latest political developments in Germany and France.
The single European currency remained near the $1.05 level a day after a survey showed business activity in the eurozone declined further in December.
The release of the German IFO index also signaled rough times ahead, with the corresponding indicator falling to 84.7 in December from 85.7 in November.
Elsewhere, U.K. wage growth accelerated more than forecast in the three months to October, cementing expectations that the Bank of England will hold off cutting interest rates on Thursday.
While the U.K.’s FTSE 100 Index is down by 0.8 percent, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is just below the unchanged line.
Bunzl has slumped after the business supplies distributor said persistent deflation, particularly in continental Europe, would have a slight impact on its annual profit.
Capita shares have also plummeted. The outsourcing firm saw its revenue drop eight percent in the first 11 months of the year.
Meanwhile, Airbus shares have advanced in Paris after Deutsche Bank upgraded its rating on the stock to “buy” from “hold”.
Thyssenkrupp nucera AG shares has also surged after the German company logged its highest quarterly sales for its alkaline electrolysers.
Asia
Asian stocks turned in a mixed performance on Tuesday as investors eyed this week’s interest rate decisions from the Federal Reserve, the Bank of Japan and the Bank of England for hints on where interest rates are headed in 2025.
The dollar edged higher against major peers as traders braced for a 25 basis point rate cut from the Fed on Wednesday. Gold and oil prices were marginally higher in Asian trading.
China’s Shanghai Composite Index fell 0.7 percent to 3,361.48 after a choppy session despite Premier Li Qiang urging government officials to swiftly carry out key economic tasks for the coming year. Hong Kong’s Hang Seng Index slipped 0.5 percent to 19,700.48.
Japanese markets ended slightly lower and the yen steadied after six days of losses ahead of central bank decisions in the U.S. and Japan on Wednesday and Thursday, respectively.
The Nikkei 225 Index dipped 0.2 percent to 39,364.68, while the broader Topix Index settled 0.4 percent lower at 2,728.20. Chip-testing equipment maker Advantest led losses to close 9.4 percent lower.
Zojirushi soared 16.7 percent after the household appliances maker raised its operating profit forecast for the year to November.
SoftBank Group shares surged 4.4 percent after U.S. President-elect Donald Trump said the technology start-up investor would invest $100 billion in the U.S. over the next four years.
Seoul stocks tumbled after reports that authorities were pushing to summon impeached President Yoon Suk Yeol for questioning over his short-lived bid to impose martial law.
The Kospi slumped 1.3 percent to 2,456.81 as the country’s Constitutional Court began the process of reviewing the impeachment of Yoon.
Heavyweight Samsung Electronics declined 2.5 percent after Goldman Sachs reduced its price target on the stock and lowered its earnings estimates.
Australian markets rose notably to snap a five-day losing streak. The benchmark S&P/ASX 200 Index jumped 0.8 percent to 8,314, with financials leading the surge. The broader All Ordinaries Index climbed 0.8 percent to 8,558.60.
Commonwealth Bank of Australia, ANZ and Westpac rose between 0.7 percent and 1.6 percent. Lower oil prices weighed on the energy sector, with Woodside Energy falling 1 percent and Santos losing 0.6 percent. Karoon Energy plummeted 9.7 percent after trimming its production guidance.
Investors shrugged off the results of a private survey that showed Australian consumer sentiment fell in December.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended up 0.9 percent at 12,914.30.
Commodities
Crude oil futures are sliding $0.82 to $69.89 a barrel after falling $0.58 to $70.71 a barrel on Monday. Meanwhile, after slipping $5.80 to $2,670 an ounce in the previous session, gold futures are declining $11.60 to $2,658.40 an ounce.
On the currency front, the U.S. dollar is trading at 153.93 yen compared to the 154.15 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0494 compared to yesterday’s $1.0512.
