The primary U.S. index futures indicate a lower opening for Tuesday, suggesting that stocks might retreat after a modestly positive performance in the previous session. Investors might seek to capitalize on Monday’s minor gains, which saw the Nasdaq and the S&P 500 closing at new record highs.
Despite an overall subdued trading atmosphere, the market is awaiting two significant economic events scheduled for Wednesday. The initial trading activity on Wednesday is expected to be influenced by the Labor Department’s report on consumer price inflation for May. Economists are forecasting a 0.1 percent increase in consumer prices for May, following a 0.3 percent rise in April. Core consumer prices, excluding food and energy, are projected to rise by 0.3 percent for a second consecutive month.
The annual growth rate of consumer prices is anticipated to remain steady at 3.4 percent, while the annual growth rate of core consumer prices is expected to decrease slightly to 3.5 percent from 3.6 percent in April. This data could significantly affect interest rate expectations ahead of the Federal Reserve’s monetary policy announcement later in the day. Although the Fed is expected to maintain current interest rates, traders will closely examine the accompanying statement and the latest economic and interest rate projections from Fed officials.
Stocks displayed a lack of direction on Monday, extending the tepid performance from last Thursday and Friday. Major averages fluctuated around the unchanged line before closing slightly higher. The Nasdaq advanced by 59.40 points, or 0.4 percent, to 17,192.53; the S&P 500 increased by 13.80 points, or 0.3 percent, to 5,360.79; and the Dow inched up by 69.05 points, or 0.2 percent, to 38,868.04. Traders appeared hesitant to make significant moves ahead of key events later in the week, including the Federal Reserve's policy meeting.
Wednesday will bring the Federal Reserve’s monetary policy decision, with the central bank expected to leave interest rates unchanged. Given the anticipated nature of this decision, traders will focus on the Fed’s latest economic and interest rate projections. Ahead of this, the Labor Department’s report on May’s consumer price inflation will be released.
Other reports on producer prices, import and export prices, as well as consumer sentiment and inflation expectations, are also likely to capture attention later in the week. Notably, oil service stocks saw a significant uptick, propelling the Philadelphia Oil Service Index up by 2.9 percent, driven by a notable rise in crude oil prices.
Gold stocks also displayed considerable strength, as evidenced by a 1.6 percent increase in the NYSE Arca Gold Bugs Index, attributed to a hike in gold prices. Semiconductor stocks performed strongly, resulting in a 1.4 percent rise in the Philadelphia Semiconductor Index. Computer hardware, natural gas, and retail stocks showed some positive momentum, while telecom stocks declined significantly, adding to the steep losses from the previous Friday.
### Commodity and Currency Markets
Crude oil futures are down $0.30, trading at $77.44 a barrel after a sharp rise of $2.21 to $77.74 a barrel on Monday. Gold futures have increased by $4.90 to $2,331.90 an ounce, following a $2 gain to $2,327 in the previous session.
In the currency market, the U.S. dollar is trading at 156.90 yen, slightly down from 157.04 yen at Monday’s New York close. Against the euro, the dollar is valued at $1.0730, down from $1.0765 yesterday.
### Asia
Asian stocks mostly declined on Tuesday amid political uncertainties in the European Union following gains by the far right in the European Parliament elections. Investors are also awaiting key U.S. inflation data and the Federal Reserve’s policy meeting outcomes. Market sentiment reflects reduced expectations for a rate cut this year, with many analysts forecasting the first rate reduction by the Federal Reserve in November.
The dollar remained within a tight range, and gold hovered near one-month lows, while oil dipped slightly following Monday’s 3 percent rally, spurred by hopes for robust summer fuel demand and potential U.S. crude purchases for its petroleum reserves.China's Shanghai Composite Index fell by 0.8% to 3,028.05 as trading resumed after an extended holiday weekend. Electric vehicle manufacturers saw declines as traders awaited the European Commission's verdict on provisional duties. Meanwhile, Hong Kong's Hang Seng Index dropped by 1.0%, reaching 18,176.34.
Japanese markets wrapped up slightly higher, supported by a weaker yen in anticipation of Friday's Bank of Japan (BOJ) policy meeting. The central bank is expected to either reduce its monthly purchases or outline a gradual tapering plan after the conclusion of its two-day meeting. The Nikkei 225 Index gained 0.3% to end at 39,134.79, while the broader Topix Index fell by 0.2% to 2,776.80. In top gainers, Kokusai Electric surged 3.8%, and Tokyo Electron increased by 2.2%.
In Seoul, stocks edged higher, with the Kospi rising by 0.2% to 2,705.32, bolstered by overnight gains on Wall Street. Leading the market, battery manufacturer LG Energy Solution climbed by 1%, and pharmaceutical giant Celltrion advanced by 1.6%.
Australian markets experienced a sharp decline, led by the materials, gold mining, and property development sectors. Major companies like BHP, Rio Tinto, and Fortescue Metals Group lost between 2% and 3%. Gold miners Newmont, Northern Star, and Evolution saw significant drops ranging from 3% to 6%. The benchmark S&P/ASX 200 Index decreased by 1.3% to close at 7,755.40, marking its worst single-day loss in seven weeks. Similarly, the broader All Ordinaries Index ended down by 1.3% at 8,005.90. Across the Tasman Sea, New Zealand's S&P/NZX-50 Index finished slightly lower at 11,785.48.
**Europe**
European stocks largely fell on Tuesday as investors turned their attention to upcoming U.S. consumer price data and the Federal Reserve's interest rate decision on Wednesday. While the Fed is expected to keep interest rates steady, traders will focus intently on officials' updated economic and rate projections.
Recent employment data from the U.K. presented a mixed economic picture. The U.K.'s unemployment rate edged up to 4.4% from 4.3% over the three months leading to April, the highest rate since September 2021. Concurrently, wage growth surged to 5.9%, raising concerns that increasing wages might fuel consumer prices, potentially hindering the central bank's progress in curbing inflation.
In the markets, France's CAC 40 Index fell by 1.2%, the U.K.'s FTSE 100 Index dropped by 0.9%, and Germany's DAX Index declined by 0.8%. The euro remained stable after hitting a one-month low following French President Emmanuel Macron's decision to call a snap national election due to strong far-right performance in the European Parliament elections. French bonds stabilized after the yields on the country's 10-year debt hit a year-high on Monday.
In corporate developments, Rio Tinto's shares fell after the mining giant announced the acquisition of Mitsubishi Corp.'s 11.65% stake in Boyne Smelters for an undisclosed amount. Transport operator FirstGroup also dipped after reporting a decrease in annual revenue. Shares of Societe Generale declined further due to ongoing challenges in selling its securities services unit. Atos SE suffered substantial losses after revealing that it had chosen the Onepoint consortium, consisting of Onepoint, Butler Industries, Econocom, and various financial creditors, between two financial restructuring proposals. Conversely, Senior Plc rallied after securing multiple long-term production contracts with Collins Aerospace.
**U.S. Economic Reports**
The Treasury Department is set to release the results of this month's auction of $39 billion worth of ten-year notes at 1 p.m. ET.
**Stocks In Focus**
Shares of Calavo Growers (CVGW) are surging in pre-market trading following the company's better-than-expected fiscal second-quarter results on both revenue and earnings fronts. Eli Lilly (LLY) is also likely to open stronger after an FDA advisory panel recommended approval of its Alzheimer's treatment, donanemab. Additionally, General Motors (GM) shares may rise after the company announced its board has sanctioned the repurchase of up to $6 billion of outstanding common stock.
