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Futures Pointing To Modestly Lower Open On Wall Street
US Market
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 turning higher over the course of the previous session.
Some traders may look to cash in on recent strength in the markets, as the rebound seen over the course of Monday’s session lifted the major averages to their best levels in over three months.
Lingering concerns about the global economic outlook, inflation and higher interest rates may also weigh on the markets.
A notable advance by shares of Walmart (WMT) may limit any early downside, however, with the retail giant jumping by 3.8 percent in pre-market trading.
The surge by Walmart comes after the company reported better than expected second quarter results and improved its full-year forecast.
On the other hand, shares of Home Depot (HD) are seeing pre-market weakness after the home improvement retailer reported better than expected second quarter earnings and revenue but a decrease in customer transactions.
After spending a couple of hours of the day’s session in negative territory, U.S. stocks recovered and stayed firm to eventually close on a positive note on Monday.
The early weakness was due to weak industrial output, retail sales and fixed-asset investment data out of China. Data showing weak business activity in New York hurt as well.
However, stocks rebounded as the day progressed, with recent soft inflation data leading to speculation that the Federal Reserve might slow down the pace of monetary tightening.
The major averages all ended on a firm note. The Dow ended with a gain of 151.39 points or 0.5 percent at 33,912.44, rallying from an early low of 33,582.96.
The S&P 500 settled with a gain of 16.99 points or 0.4 percent at 4,297.14, while the Nasdaq advanced 80.87 points or 0.6 percent at 13,128.05, recovering from a low of 12,993.78.
The New York Federal Reserve released a report unexpectedly showing a substantial contraction in regional manufacturing activity in the month of August.
The New York Fed said its general business conditions index plummeted to a negative 31.3 in August from a positive 11.1 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to a positive 8.5.
Looking ahead, the New York Fed said firms did not expect much improvement in business conditions over the next six months.
A separate report released by the National Association of Home Builders unexpectedly showed a continued deterioration in U.S. homebuilder confidence in the month of August.
The report showed the NAHB/Wells Fargo Housing Market Index dropped to 49 in August from 55 in July, falling below the break-even measure of 50 for the first time since May 2020. Economists had expected the index to come in unchanged.
Walt Disney (DIS) shares gained more than 2 percent, reacting to news that activist investor Daniel Loeb has taken a new stake in the company.
Snap (SNAP) rallied more than 5 percent, buoyed by an announcement from the company that its subscription service Snapchat+ had surpassed 1 million paid users.
U.S. Economic Reports
New residential construction in the U.S. tumbled by much more than expected in the month of July, according to a report released by the Commerce Department on Tuesday.
The report showed housing starts plunged by 9.6 percent to an annual rate of 1.446 million in July after slumping by 2.4 percent to a rate of 1.559 million in June. Economists had expected housing starts to decline by 1.2 percent to a rate of 1.540 million.
With the much steeper than expected drop, housing starts dove to their lowest annual rate since hitting 1.430 million in February of 2021.
Building permits, an indicator of future housing demand, also fell by 1.3 percent to an annual rate of 1.674 million after inching up by 0.1 percent to a revised rate of 1.696 million in June.
Economists had expected building permits to tumble by 2.1 percent to an annual rate of 1.650 million from the 1.685 million 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 July. Industrial production is expected to rise by 0.3 percent in July after edging down by 0.2 percent in June.
Stocks in Focus
Shares of Nu Holdings (NU) are moving sharply higher in pre-market trading after the digital banking company reported second quarter revenue that more than doubled year-over-year.
Online banking company Ally Financial (ALLY) is also likely to see initial strength following news Warren Buffett’s Berkshire Hathaway has more than tripled its stake in the company.
On the other hand, shares of ZipRecruiter (ZIP) are seeing notable pre-market weakness after the employment website operator reported better than expected second quarter results but lowered its full-year revenue guidance.
Europe
European stocks have moved mostly higher on Tuesday as disappointing data from the United States has led to speculation of the Federal Reserve will slow the pace of its interest rate hikes.
New York state manufacturing activity plummeted in August and a gauge of homebuilder sentiment declined for an eighth-straight month, helping ease worries about aggressive policy tightening by the Fed.
Investors have shrugged off the latest ZEW survey results showing that economic sentiment continued to deteriorate in the euro area and in Germany.
Elsewhere, the U.K. labor market showed more signs of cooling, with real levels of wages falling at the fastest pace in two decades, official data showed.
Underlying sentiment remained supported amid expectations that Chinese policymakers will roll out more stimulus measures to boost sagging economic growth.
While the U.K.’s FTSE 100 Index has risen by 0.6 percent, the German DAX Index is up by 0.4 percent and the French CAC 40 Index is up by 0.1 percent.
Dutch health technology firm Philips has shown a significant move to the upside after announcing the upcoming departure of CEO Frans van Houten.
BHP shares have also surged after the mining giant posted record annual earnings and said it would return a record amount of cash to investors.
Ted Baker has also jumped after the fashion brand agreed to a 211 million pound ($254.3 million) final cash offer from Juicy Couture, Reebok and David Beckham brand owner Authentic Brands Group LLC.
Darktrace has also rallied. The cybersecurity company said it is in early stages of discussions with private equity firm Thoma Bravo about a possible takeover.
Delivery Hero shares have also soared. The German food-delivery firm confirmed its full-year targets, which it updated in July.
Meanwhile, Sonova has plummeted. The Swiss hearing aid maker lowered its full-year earnings forecast, citing a subdued market and ongoing input cost challenges.
Pandora has also slumped after the Danish jewelry maker posted a decrease in second-quarter operating profit.
Mondi has also fallen. The packaging and paper company has agreed to acquire the Duino mill near Trieste in Italy from the Burgo Group for a total consideration of 40 million euros.
Asia
Asian stocks rose broadly on Tuesday, even as the upside remained capped by growing concerns of a global recession.
Chinese shares finished marginally higher amid expectations that policymakers would roll out more stimulus measures to boost sagging economic growth.
Media reports suggested that the government is supporting beleaguered property developers with bond guarantees.
Hong Kong’s Hang Seng Index fell 1.1 percent to 19,830.52 as the audit watchdog widened its investigation into China Evergrande Group’s financial reporting.
Japanese shares ended on a flat note as underwhelming data from China and the United States added to concerns over weakening global growth.
The Nikkei 225 Index ended marginally lower at 28,868.91, snapping a two-day rally that lifted it to over seven-month high on Monday. The broader Topix slipped 0.2 percent to settle at 1,981.96.
Shipping firms led losses, with Mitsui O.S.K. Lines, Nippon Yusen and Kawasaki Kisen Kaisha all falling around 4 percent. Oil explorers and refiners followed suit as oil extend recent losses on demand worries.
SoftBank Group lost 2.6 percent after the Financial Times reported hedge fund Elliott Management effectively exited its position in the Japanese technology start-up investor.
Seoul stocks rose for a third straight session as markets pared bets for continued aggressive Fed tightening.
The Kospi edged up 0.2 percent to finish at 2,533.52. Tech stocks gained ground, with Samsung Electronics rising 1.3 percent and SK Hynix adding 3.6 percent following Microsoft co-founder Bill Gate’s visit to Seoul.
Australian markets advanced as mining giant BHP reported its largest-ever full-year profit and minutes of the Reserve Bank’s August 2 policy meeting indicated that the board is not on a pre-set tightening path.
The benchmark S&P/ASX 200 Index rose 0.6 percent to 7,105.40, while the broader All Ordinaires Index closed 0.5 percent higher at 7,361.90.
BHP surged 4.1 percent after reporting a record profit for fiscal 2022, boosted by strong commodity prices and higher sales from its Western Australia iron ore operations.
Commodities
Crude oil futures are rising $0.42 to $89.83 a barrel after plunging $2.68 to $89.41 a barrel on Monday. Meanwhile, after sliding $17.40 to $1,798.10 an ounce in the previous session, gold futures are falling $9.40 to $1,788.70 an ounce.
On the currency front, the U.S. dollar is trading at 134.44 yen compared to the 133.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0143 compared to yesterday’s $1.0160.
