After ending the previous session sharply lower, stocks are likely to move back to the upside in early trading on Tuesday. The major index futures are currently pointing to a moderately higher open for the markets, with the Dow futures up by 61 points.
Bargain hunting may contribute to any early strength on Wall Street after the weakness seen on Monday dragged the major averages down to their worst closing levels in over three months.
The markets may also benefit from a report from Eurostat showing that economic activity in the euro area was flat in the first quarter compared to expectations for a modest contraction. Stronger than expected German economic growth helped to offset weakness in other countries.
In U.S. economic news, the Commerce Department released a report showing a modest increase in retail sales in the month of April, with the increase in sales matching economist estimates.
The report showed that retail sales edged up by 0.1 percent in April following a revised 0.7 percent increase in March. Economists had expected sales to increase by 0.1 percent compared to the 0.8 percent growth originally reported for the previous month.
Excluding a 0.5 percent increase in auto sales, retail sales still rose by 0.1 percent in April compared to a 0.8 percent increase in the previous month.
Additionally, a report from the New York Federal Reserve showed that activity in the New York manufacturing sector has expanded at an accelerated rate in the month of May
The New York Fed said its general business conditions index jumped to 17.1 in May from 6.6 in April, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to show a more modest increase to a reading of 10.0.
The Labor Department also released a report showing that consumer prices came in unchanged in April, in line with economist estimates. Core prices, which exclude food and energy prices, rose by 0.2 percent, also matching expectations.
Among individual stocks, shares of Home Depot (HD) are likely to be in focus after the home improvement retail giant reported first quarter earnings that exceeded analyst estimates but on weaker than expected sales. The company also raised its full year earnings and sales guidance.
Shares of Avon Products (AVP) are under pressure in pre-market trading after Coty Inc. withdrew its $10.7 billion offer to acquire the cosmetics company. The news comes in the wake of the expiration of a deadline to begin discussions.
Stocks saw considerable weakness during trading on Monday, as traders expressed continued concerns about the latest developments overseas. The losses on the day extended a recent downward for the markets, which have trended lower for most of May.
After falling sharply at the open, the major averages staged a recovery in mid-day trading but moved back to the downside going into the close. The Dow fell 125.25 points or 1 percent to 12,695.35, the Nasdaq dropped 31.24 points or 1.1 percent to 2,902.58 and the S&P 500 slid 15.04 points or 1.1 percent to 1,338.35.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Tuesday. Japan's Nikkei 225 Index fell by 0.8 percent on the day, while Hong Kong's Hang Seng Index advanced by 0.8 percent.
Meanwhile, the major European markets are seeing modest strength. The U.K.'s FTSE 100 Index is up by 0.1 percent, the German DAX Index is up by 0.3 percent, and the French CAC 40 Index is up by 0.5 percent.
In commodities trading, crude oil futures are climbing $0.60 to $95.38 a barrel after falling $1.35 to $94.78 a barrel on Monday. Gold futures are edging up $1.70 to $1,562.70 an ounce. In the previous session, the precious metal declined $23 to $1,561 an ounce.
On the currency front, the U.S. dollar is trading at 80.05 yen compared to the 79.85 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2839 compared to yesterday's $1.2823.
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