The major U.S. index futures are currently indicating a lower open on Tuesday, suggesting that stocks may pull back after the significant gains seen last Friday.
Investors might be looking to secure profits from the previous session amid ongoing uncertainty regarding interest rate outlooks.
While the Federal Reserve is widely expected to lower rates during its upcoming meeting later this month, there is some debate about the extent of the rate cuts.
According to CME Group's FedWatch Tool, there is a 67% chance of a quarter-point rate cut and a 33% chance of a half-point rate cut.
Analysts are divided; Jamie Cox, a managing partner at Harris Financial Group, asserts there is no justification for a 50 basis point cut. Meanwhile, ING Chief International Economist James Knightley mentions that a weaker-than-expected jobs report could sway the decision towards a 50bp rate cut.
This week's focus will be on the monthly employment data, with economists forecasting a rise of 165,000 jobs in August, up from the 114,000 jobs added in July. The unemployment rate is expected to decrease slightly to 4.2% from July's 4.3%, which was the highest level since October 2021.
Last Friday, stocks fluctuated but ultimately closed sharply higher. The Dow reached a new record, closing higher for the fifth time in six sessions.
Major indices set new highs towards the close. The Nasdaq surged 197.19 points, or 1.1%, to 17,713.62; the S&P 500 jumped 56.44 points, or 1.0%, to 5,648.40; and the Dow climbed 228.03 points, or 0.6%, to 41,563.08.
Despite a mixed performance for the week—with the Nasdaq sliding by 0.9%, the S&P 500 edging up by 0.2%, and the Dow advancing by 0.9%—the higher close on Wall Street came after the Commerce Department released consumer price inflation data preferred by the Federal Reserve.
The Commerce Department reported that consumer prices increased as expected in July, while the annual rate of price growth remained unexpectedly flat.
The personal consumption expenditures (PCE) price index rose by 0.2% in July after a 0.1% increase in June, matching expectations. The core PCE price index, which excludes food and energy prices, also went up by 0.2% in July, consistent with June's increase and economist estimates.
Both the PCE price index and the core PCE price index maintained their annual growth rates at 2.5% and 2.6%, respectively, contrary to economists' expectations of a 0.1 percentage point increase.
The inflation data has reinforced expectations of a rate cut by the Fed this month, but uncertainties about the rate cut pace have caused market volatility.
Semiconductor stocks surged, leading to a 2.6% increase in the Philadelphia Semiconductor Index. Intel (INTC) saw a 9.5% spike after a Bloomberg report indicated it is exploring options including splitting its product-design and manufacturing businesses. Marvell Technology (MRVL) also rose by 9.2% following better-than-expected fiscal second-quarter results.
Retail stocks showed significant strength with the Dow Jones U.S. Retail Index gaining 1.7%. Computer hardware, banking, and housing stocks also performed well, with most major sectors moving higher.
**Commodity and Currency Markets**
Crude oil futures are down $0.62 to $72.93 a barrel, following a $2.36 drop to $73.55 a barrel last Friday. Gold futures are edging down $2 to $2,525.60 an ounce, after falling $32.70 to $2,527.60 an ounce in the previous session.
In currency markets, the U.S. dollar is trading at 145.99 yen, down from 146.90 yen on Monday. Against the euro, the dollar is valued at $1.1048, compared to $1.1072 yesterday.
**Asia**
Asian stocks closed subdued on Tuesday as investors awaited further U.S. economic data, including August's non-farm payrolls report, to gauge the Federal Reserve's rate cut decision later this month. Concerns over weak demand in China and rising tensions in the Middle East also weighed on regional markets.
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This version has been edited for clarity, conciseness, and readability while retaining the original meaning and information conveyed.### Asian Markets
Oil and gold prices retreated in Asian trading as the dollar continued its rebound ahead of key manufacturing and service PMI data releases.
China's Shanghai Composite Index declined by 0.3%, settling at 2,802.98, driven by losses in banking and energy stocks. Similarly, Hong Kong's Hang Seng Index saw a 0.2% drop, closing at 17,651.49.
Sanergy Group, a graphite product manufacturer, plummeted 98% following a warning from Hong Kong’s securities regulator about its highly concentrated ownership.
In Japan, stocks ended lower as the yen rebounded from a two-week low encountered earlier in the session. The Nikkei 225 Index closed marginally down at 38,686.31, while the broader Topix Index rose by 0.6% to 2,733.27. Tech stocks such as Advantest and Tokyo Electron fell by 1-2%. However, banking stocks advanced amid rising bond yields both domestically and internationally. Mitsubishi UFJ Financial Group surged 3.3% and Mizuho Financial Group climbed 2.6%.
Seoul stocks also experienced a notable drop despite soft inflation data suggesting a potential rate cut next month. The Kospi decreased by 0.6%, closing at 2,664.63, with tech stocks leading the decline. Samsung Electronics lost 2.6% while SK Hynix fell by 3.3%. South Korea's headline inflation data showed a decrease from 2.6% to 2.0% in August, marking the lowest year-on-year level since March 2021.
Australian markets ended slightly lower due to losses in consumer-related and mining stocks. Retailer Woolworths declined by 1.7% following its decision to sell its stakes in liquor stores. Across the Tasman, New Zealand's S&P/NZX-50 Index eased by 0.2%, closing at 12,534.51.
### European Markets
European stocks were modestly lower on Tuesday as investors awaited comments from European Central Bank policymakers and the release of the U.S. ISM manufacturing survey for further directional cues. The pan-European STOXX 600 Index slipped 0.3% to 523.25 after ending flat with a negative bias on Monday. Similarly, the German DAX Index declined by 0.3%, the French CAC 40 Index decreased by 0.2%, and the U.K.'s FTSE 100 Index was down by 0.5%.
In specific market moves, Swiss private-equity firm Partners Group fell sharply after reporting first-half results that missed expectations. Moreover, miners such as Anglo American, Antofagasta, and Glencore fell in London, influenced by declining metal prices due to a firmer dollar and concerns over slowing Chinese growth.
On a brighter note, Wizz Air Holdings, a Hungarian ultra low-cost carrier, recorded a slight increase after reporting a rise in load factor and passengers for August compared to the previous year. Rolls-Royce surged following an announcement by Cathay Pacific that issues with the British manufacturer's Trent XWB-97 engines could be resolved by September 7.
Watches Of Switzerland soared as the luxury watch and jewelry retailer affirmed its FY25 guidance. Equipment rental company Ashtead Group also moved strongly upward after maintaining its annual profit forecast. In Paris, shares of Valneva SE surged following the announcement of positive phase II booster results for their Lyme disease vaccine, developed in partnership with Pfizer.
### U.S. Economic News
The Institute for Supply Management is set to release its report on manufacturing sector activity for August at 10 am ET. The ISM's manufacturing index is expected to tick up to 47.5 from 46.8 in July, although a reading below 50 would still indicate contraction.
Additionally, at 10 am ET, the Commerce Department will release its report on construction spending for July. Expectations are for construction spending to remain unchanged after a 0.3% dip in June.
### Stocks in Focus
U.S. Steel (X) shares are showing significant pre-market weakness after Vice President Kamala Harris voiced opposition to the company's potential sale to Japan's Nippon Steel.
Aerospace giant Boeing (BA) might also face pressure after Wells Fargo downgraded its stock rating to Underweight from Equal Weight.
Conversely, shares of Unity Software (U) are likely to see initial gains after Morgan Stanley upgraded its stock rating to Overweight from Equal Weight.
