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

wallstreet oct05 16aug22 lt

After turning higher over the course of the previous session, stocks may move back to the downside in early trading on Tuesday. The major index futures are currently pointing to a modestly lower open for the markets, with the S&P 500 futures down by 0.2 percent.

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.

In U.S. economic news, the Commerce Department released a report showing new residential construction tumbled by much more than expected in the month of July.

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.

Just before the start of trading, 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.

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 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.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Hong Kong's Hang Seng Index slumped by 1.1 percent and Japan's Nikkei 225 Index closed just below the unchanged line, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets have all moved to the upside on the day. 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.

In commodities trading, 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.

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