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Stocks May Give Back Ground In Early Trading - U.S. Commentary


Following the long holiday weekend, stocks are likely to move to the downside in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 62 points.

Profit taking may contribute to initial weakness on Wall Street following the strong upward move shown by stocks last week.

The advance seen last Friday lifted the Dow and the Nasdaq to their best closing levels in three months and the S&P 500 reached a two-month closing high.

Uncertainty about the potential for a trade deal between the U.S. and China may also weigh on the markets as the next round of trade talks get underway in Washington, D.C. this week.

News that China accused the U.S. of attempting to curtail its technology development by putting pressure on allies to shun networks supplied by Huawei Technologies has raised concerns about tensions between the world's two largest economies.

Selling pressure may be somewhat subdued, however, with a significant advance by Walmart (WMT) likely to help limit the downside for the markets.

Shares of Walmart are moving notably higher in pre-market trading after the retail giant reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Shortly after the start of trading, the National Association of Homebuilders is scheduled to release its report on homebuilder confidence in the month of February. The housing market index is expected to inch up to 59 in February after rising to 58 in January.

Following the mixed performance seen on Thursday, stocks moved mostly higher over the course of the trading day on Friday.

The major averages all closed firmly positive, although the Dow outperformed its counterparts. The Dow soared 443.86 points or 1.7 percent to 25,883.25, the Nasdaq climbed 45.46 points or 0.6 percent to 7,472.41 and the S&P 500 jumped 29.87 points or 1.1 percent to 2,775.60.

With the advance on the day, the major averages all moved higher for the week. The Dow spiked by 3.1 percent, while the Nasdaq and the S&P 500 shot up by 2.4 percent and 2.5 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has dipped by 0.2 percent, the French CAC 40 Index is down by 0.4 percent and the U.K.'s FTSE 100 Index is down by 0.6 percent.

In commodities trading, crude oil futures are climbing $0.47 to $56.06 a barrel after jumping $1.18 to $55.59 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,334.80, up $12.70 from the previous session's close of $1,322.10. On Friday, gold advanced $8.20.

On the currency front, the U.S. dollar is trading at 110.68 yen compared yesterday's 110.62 yen. Against the euro, the dollar is valued at $1.1294 compared to $1.1311.

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