The major U.S. index futures are indicating a decline at the start of trading on Tuesday, suggesting a potential pullback following Monday's gains. This adjustment follows the Nasdaq's new record closing high, driven by a rise in technology stocks. Meanwhile, the Dow has recorded its eighth successive session of decline and appears set for further losses.
This downward trend on Wall Street comes as traders anticipate the Federal Reserve's upcoming monetary policy announcement scheduled for Wednesday. The Fed is anticipated to continue its strategy of reducing interest rates, with current data from CME Group's FedWatch Tool showing a 97.1 percent likelihood of a 25 basis point rate cut. Market participants will closely scrutinize the Fed's statement and officials' latest economic projections, particularly regarding interest rate forecasts.
Recent data indicating persistent inflation has sparked concerns that the Fed might reduce rates at a slower pace than initially expected in the coming year.
After a tepid performance last Friday, stocks generally rose on Monday, with the tech-driven Nasdaq leading the way to a record closing high. The Nasdaq retreated from its peak but finished the day up by 247.17 points, or 1.2 percent, to 20,173.89. Meanwhile, the S&P 500 gained 22.99 points, or 0.4 percent, reaching 6,074.08, and the Dow decreased by 110.58 points, or 0.3 percent, to 43,717.48. The Dow's consecutive session losses mark its lowest close in nearly a month.
The Nasdaq's ascent was supported by strong performances from semiconductor stocks, with the Philadelphia Semiconductor Index climbing by 2.1 percent. Broadcom continued its rally from Friday, while Micron saw notable gains following JPMorgan's positive projections for its upcoming fiscal first-quarter results.
Networking stocks also experienced significant growth, with the NYSE Arca Networking Index rising by 2.0 percent to a new record high. These tech stocks benefited from positive sentiment regarding interest rates ahead of the approaching Federal Reserve meeting.
Conversely, oil stocks saw a significant downturn due to falling crude oil prices, pulling the NYSE Arca Oil Index down by 2.9 percent. Weakness was also observed in telecom, oil services, and natural gas stocks, partially counteracting the robustness of the tech sector.
**Commodity and Currency Markets**
Crude oil futures are declining by $0.82, to $69.89 per barrel, following a $0.58 drop to $70.71 per barrel on Monday. Gold futures are also falling, down by $11.60 to $2,658.40 an ounce, after a $5.80 decrease in the previous session to $2,670 an ounce.
In foreign exchange markets, the U.S. dollar is trading at 153.93 yen, down from 154.15 yen at the close in New York on Monday. It is valued at $1.0494 against the euro, down from $1.0512 the previous day.
**Asia**
Asian markets showed mixed results on Tuesday as investors focused on this week's interest rate decisions from the Federal Reserve, Bank of Japan, and Bank of England, seeking insights into the 2025 rate trajectory. As traders prepared for a 25 basis point rate cut from the Fed on Wednesday, the dollar gained marginally against major counterparts. Meanwhile, gold and oil prices saw modest increases during Asian trading.
China's Shanghai Composite Index declined by 0.7 percent to close at 3,361.48, despite Premier Li Qiang's calls for urgent action on key economic tasks for the upcoming year. Hong Kong's Hang Seng Index decreased by 0.5 percent, ending at 19,700.48. Japanese markets experienced slight declines, with the yen stabilizing after six consecutive days of losses ahead of the central bank meetings in the U.S. and Japan scheduled for Wednesday and Thursday.
The Nikkei 225 Index edged down by 0.2 percent to 39,364.68, and the Topix Index decreased by 0.4 percent, settling at 2,728.20. Advantest, a chip-testing equipment manufacturer, led the losses with a 9.4 percent drop.
Zojirushi surged by 16.7 percent after revising its operating profit forecast upward for the year ending in November. SoftBank Group shares also jumped by 4.4 percent following U.S. President-elect Donald Trump's announcement of a planned $100 billion investment in the U.S. by the tech investor over the next four years.
In Seoul, stocks plummeted amid reports suggesting authorities are pursuing the questioning of impeached President Yoon Suk Yeol regarding his brief attempt to declare martial law.The Kospi index fell 1.3% to 2,456.81 as South Korea's Constitutional Court initiated the review process for President Yoon's impeachment. In the technology sector, Samsung Electronics experienced a 2.5% decline following a downgrade in its stock price target and earnings estimates by Goldman Sachs.
Conversely, Australian markets rebounded after a five-day downturn. The S&P/ASX 200 Index rose 0.8% to 8,314, propelled by gains in the financial sector, while the broader All Ordinaries Index also increased by 0.8% to 8,558.60. Notable financial institutions including Commonwealth Bank of Australia, ANZ, and Westpac saw gains ranging from 0.7% to 1.6%. However, the energy sector faced pressures from falling oil prices, with notable declines in Woodside Energy, down 1%, and Santos, slipping 0.6%. Karoon Energy saw a significant 9.7% drop after reducing its production forecasts. In spite of a survey indicating a decline in Australian consumer confidence in December, market sentiment remained resilient.
In New Zealand, the S&P/NZX-50 Index went up by 0.9% to 12,914.30.
**Europe**: European stock markets hit two-week lows on Tuesday amid anticipation of major central bank decisions later in the week, while investors monitored political developments in Germany and France. The euro remained steady close to $1.05 following data showing a continued decline in eurozone business activity in December. Additionally, the German IFO index dropped to 84.7 in December from November’s 85.7, indicating challenging economic conditions ahead. Meanwhile, U.K. wage growth surpassed expectations in the three months leading to October, solidifying forecasts that the Bank of England will maintain current interest rates on Thursday.
In market movements, the FTSE 100 Index in the U.K. decreased by 0.8%, Germany's DAX Index fell by 0.2%, and France's CAC 40 Index marginally declined. Bunzl's shares fell after the company announced that persistent deflation, especially in mainland Europe, is likely to slightly impact its annual profit. Capita's shares also dropped as its revenue fell by 8% over the first 11 months of the year. Conversely, Airbus shares gained in Paris following an upgrade from Deutsche Bank, and Thyssenkrupp nucera AG shares rose due to the company achieving record quarterly sales for its alkaline electrolysers.
**U.S. Economic News**: In the United States, retail sales for November surpassed expectations, driven largely by the automotive sector, as reported by the Commerce Department. Retail sales increased by 0.7% in November after a 0.5% upward revision for October. This growth exceeded economists' forecasts, who had predicted a 0.5% rise. Excluding automotive sales, retail sales saw a modest 0.2% increase in November, consistent with the adjusted growth noted in October. This figure was anticipated to rise by 0.4%, compared to the previously reported 0.1% increase.
The Federal Reserve is set to release information on November's industrial production at 9:15 AM ET, with expectations of a 0.3% rise after a 0.3% decline in October. Later, at 10 AM ET, the National Association of Home Builders will publish its homebuilder confidence index for December, anticipated to rise slightly to 47, following a climb to 46 in November. Around the same time, the Commerce Department will report on October's business inventories, which are expected to have grown by 0.1%, consistent with September's increase. Additionally, the Treasury Department will report the results of its auction of $13 billion in twenty-year bonds at 1 PM ET.
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