Stocks may show a lack of direction in early trading on Tuesday following the notable rebound seen in the previous session. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures down by just 3 points.
While some traders may look to continue to pick up stocks at reduced levels following the sell-off seen in recent weeks, buying interest is likely to be subdued amid news that Fitch Ratings lowered Japan's credit rating.
Fitch cut Japan's long-term foreign and local currency issuer default ratings to A+ from AA and AA-, respectively, with the ratings agency citing growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios
Andrew Colquhoun, Head of Asia-Pacific Sovereigns at Fitch, said, "The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk."
Traders are also likely to keep an eye on developments in Europe ahead of a key European Union summit in Brussels on Wednesday.
Not long after the open, trading could be impacted by the release of the National Association of Realtor's monthly report on existing home sales. Economists expect existing home sales to climb to an annual rate of 4.66 million in April from 4.48 million in March.
Meanwhile, shares of Best Buy (BBY) are likely to see early strength after the consumer electronics retailer reported better than expected first quarter results. The company also reaffirmed its full year earnings guidance.
Williams-Sonoma (WSM) also reported first quarter results that exceeded analyst estimates and forecast second quarter and full year results in line with expectations.
On the other hand, shares of Facebook (FB) are moving lower in pre-market trading, extending the steep drop seen in the previous session. Traders continue to keep a close eye on the social networking giant following its highly anticipated debut last Friday
Stocks saw significant strength during trading on Monday, regaining some ground after showing a notable move to the downside in recent weeks. The markets benefited from bargain hunting but remain sharply lower for the month of May.
The major averages saw further upside going into the close, ending the session just off their highs. The Dow rose 135.10 points or 1.1 percent to 12,504.48, the Nasdaq jumped 68.42 points or 2.5 percent to 2,847.21 and the S&P 500 climbed 20.77 points or 1.6 percent to 1,315.99.
With the strong gains on the day, the major averages bounced well off the four-month closing lows that were set last Friday.
In overseas trading, stock markets across the Asia-Pacific region moved higher on Tuesday, benefiting from the overnight rally on Wall Street. Japan's Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index rose by 0.6 percent.
The major European markets have also shown strong moves to the upside on the day. While the U.K.'s FTSE 100 Index is up by 1.1 percent, the French CAC 40 Index and the German DAX Index are both up by 1 percent.
In commodities trading, crude oil futures are slipping $0.39 to $92.18 a barrel after ending Monday's trading up $1.09 at $92.57 a barrel. Gold futures, which fell $3.20 to $1,588.70 an ounce in the previous session, are sliding $12.40 to $1,576.30 an ounce.
On the currency front, the U.S. dollar is trading at 79.85 yen compared to the 79.31 yen it fetched at the close of trading on Monday. Against the euro, the dollar is valued at $1.2749 compared to yesterday's $1.2817.
by RTT Staff Writer
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