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U.S. Stocks May Experience Choppy Trading Early On

iHub News
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June 18 2024 9:06AM

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to experience choppy trading after ending the previous session sharply higher.

The futures remained little changed after the Commerce Department released a report showing retail sales in the U.S. inched up slightly less than expected in the month of May.

The Commerce Department said retail sales crept up by 0.1 percent in May after dipping by a revised 0.2 percent in April.

Economists had expected retail sales to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Excluding an increase in sales by motor vehicle and parts dealers, retail sales edged down by 0.1 percent in May after slipping by a revised 0.1 percent in April.

Economists had expected ex-auto sales to climb by 0.2 percent, matching the increase originally reported for the previous month.

Overall trading activity may be somewhat subdued ahead of the Juneteenth holiday on Wednesday, when the markets will be closed.

However, it is worth noting, stocks showed a lack of direction in early trading on Monday before significant buying interest emerged and lifted the markets to new record highs.

Stocks showed a lack of direction early in the session on Monday but moved notably higher over course of the trading day. The major averages all moved to the upside, with the Nasdaq and the S&P 500 reaching new record closing highs.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Nasdaq jumped 168.14 points or 1.0 percent to 17,857.02, the S&P 500 advanced 41.63 points or 0.8 percent to 5,473.23 and the Dow climbed 188.94 points or 0.5 percent to 38,778.10.

Traders initially seemed reluctant to make significant moves as they took a moment to assess the recent activity in the markets and the near-term outlook.

Buying interest emerged over the course of the session, however, with stocks potentially benefiting from the positive sentiment generated last week.

Tamer-than-expected inflation data led to strong gains by the Nasdaq and the S&P 500 last week, although the narrower Dow bucked the uptrend.

While Federal Reserve officials forecast just one interest rate cut this year following last Wednesday’s monetary policy meeting, traders remain hopeful the predictions will turn out to be overly conservative if inflation continues to slow in the coming months.

On the U.S. economic front, the Federal Reserve Bank of New York released a report showing New York manufacturing activity contracted at a notably slower rate in the month of June.

The New York Fed said its general business conditions index climbed to a negative 6.0 in June from a negative 15.6 in May, although a negative reading still indicates contraction. Economists had expected the index to rise to a negative 9.0.

Despite the continued contraction in current activity, the New York Fed said optimism about the six-month outlook picked up to its highest level in more than two years.

Oil service stocks moved sharply higher along with the price of crude oil, with the Philadelphia Oil Service Index surging by 2.1 percent after ending last Friday’s trading at a four-month closing low.

Considerable strength also emerged among computer hardware stocks, as reflected by the 2.0 percent jumped by the NYSE Arca Computer Hardware Index.

Airline stocks also showed a significant move to the upside on the day, driving the NYSE Arca Airline Index up by 1.7 percent.

Semiconductor, banking and software stocks also saw notable strength, while utilities and telecom stocks bucked the uptrend.