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.
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