The U.S. index futures are currently indicating a higher open for Tuesday's session, suggesting an upward trend in stocks despite an initial downturn in the previous session, which ended with a mixed outcome.
The futures market experienced a notable climb following the Labor Department's report indicating a December rise in producer prices that was slightly below expectations. The producer price index for final demand edged up by 0.2% in December, following a 0.4% increase in November, while economists had anticipated a 0.3% rise. However, the report also highlighted that the annual growth rate for producer prices accelerated to 3.3% in December from 3.0% in November, aligning with economists' predictions.
While the modest monthly increase in producer prices could alleviate some inflation and interest rate concerns, the accelerated annual growth may temper investor enthusiasm. On Wednesday, the Labor Department is expected to release its consumer price inflation report for December. Economists forecast a 0.3% rise in consumer prices, consistent with November's increase, while anticipating an acceleration in the annual growth rate to 2.9% from 2.7%.
Despite a significant early downturn on Monday, the S&P 500 managed to recover substantially, moving into positive territory, although the Nasdaq remained in the negative zone. By the close, the S&P 500 had gained 9.18 points or 0.2% to 5,836.22, while the Nasdaq dropped 73.53 points or 0.4% to a one-month low of 19,088.10. Meanwhile, the Dow sustained positive momentum, closing up 358.67 points or 0.9% at 42,297.12.
Tech sector weakness, notably driven by a significant dip in Nvidia (NVDA), which fell by 4.7%, impacted Wall Street early on. Quantum computing stocks also declined following comments from Meta (META) CEO Mark Zuckerberg, supporting Nvidia CEO Jensen Huang's view that practical applications for quantum computing are still at least a decade away.
Negative sentiment was further influenced by concerns over interest rate projections following a stronger-than-expected jobs report. However, selling pressures diminished as the session progressed, prompting traders to purchase undervalued stocks, which helped the S&P 500 rebound from its two-month low.
The Dow's rise was partly fueled by gains in UnitedHealth (UNH) after the U.S. government proposed a 4.3% average total increase in 2026 Medicare Advantage reimbursement rates. Steel stocks likewise made substantial gains, pushing the NYSE Arca Steel Index up by 2.6%. U.S. Steel (X) surged 6.1% on reports that Cleveland-Cliffs (CLF) and Nucor (NUE) might collaborate on a possible acquisition bid.
Biotechnology stocks also exhibited significant strength, as denoted by a 2.2% rise in the NYSE Arca Biotechnology Index, alongside gains in oil producer, housing, and natural gas sectors. Conversely, gold, airline, and computer hardware stocks displayed notable weakness.
**Commodities and Currency Markets**
Crude oil futures are declining by $0.56 to $78.26 per barrel, following Monday's substantial $2.25 rise to $78.82 per barrel. Gold futures, after dropping $36.40 to $2,678.60 in the previous session, are recovering by $6.50 to $2,685.10 an ounce.
In currency markets, the U.S. dollar is trading at 157.67 yen, up from 157.48 yen at Monday's close. It is valued at $1.0252 against the euro, slightly higher than the previous day's $1.0245.
**Asian Markets**
Asian markets largely bounced back on Tuesday following a previous massive sell-off, although Japanese markets, not open on Monday, remained in negative territory.
China's Shanghai Composite Index surged 2.5% to close at 3,240.94, within a trading range of 3,245.22 to 3,159.43, while the Shenzhen Component Index ended 3.8% higher at 10,165.17, buoyed by expectations of a gradual tariff increase by the incoming U.S. administration.
Japan's Nikkei 225 Index fell by 1.83% to 38,474.30, within a range of 39,054.35 to 38,305.91. Notable gainers included M3 with a 3.2% rise, along with Pacific Metals Co., Konica Minolta, Aeon Co., and Idemitsu Kosan Co., all posting gains of more than 2%.The semiconductor industry witnessed a notable drop with Advantest Corp's shares falling by 9.2%. Fujitsu and Furukawa Electric Co. each experienced declines of nearly 5%, while Lasertec Corp and Sapporo Holdings both suffered losses exceeding 5%.
In Hong Kong, the Hang Seng Index saw a resurgence, climbing 1.8% to close at 19,219.78, with intraday movements spanning from a peak of 19,318.36 to a low of 18,901.56.
The Kospi Index on the Korean Stock Exchange recorded a modest increase of 0.3%, finishing at 2,497.40. Trading fluctuated between 2,482.74 and 2,504.89.
Australia's S&P/ASX 200 Index closed at 8,231.00, representing a 0.5% gain from its previous close of 8,191.90. The index's range for the day was between 8,191.90 and 8,253.80.
Among the notable gainers, Ingenia Communities Group saw an impressive surge of over 15% following an optimistic earnings outlook. The Star Entertainment Group extended its rally with a 12% increase. Companies like Whitehaven Coal and Tabcorp Holdings climbed over 6%, with Johns Lyng Group gaining just under 6%.
Conversely, Life360's shares slid nearly 4%, extending prior losses. West African Resources and Qantas Airways each dipped by more than 2%, while Pinnacle Investment Management Group and Eagers Automotive declined by over 1%.
The NZX 50 Index in New Zealand experienced a 0.4% rise, closing at 12,884.38, compared to its previous close of 12,827.33. Trading spanned from 12,795.82 to 12,895.47.
Companies such as EROAD, KMD Brands, and Mercury NZ saw gains of more than 2%. Fisher & Paykel Healthcare and Sanford followed closely behind with increases over 1.8%.
On the downside, both Serko and Sky Network Television recorded steep declines of over 25%. Meridian Energy, Vista Group International, and Restaurant Brands New Zealand each fell by more than 1%.
**Europe**
European equities largely advanced on Tuesday, recovering from previous declines. While the U.K.'s FTSE 100 dipped by 0.2%, Germany's DAX Index rose by 0.7% and France's CAC 40 Index increased by 0.8%.
In Germany, notable gains were observed with Merck and BASF rising by 2.5% and 2.1%, respectively. Among other gainers, Sartorius, Deutsche Bank, Puma, Continental, Siemens Healthineers, Porsche, Daimler Truck Holding, Commerzbank, and Siemens Energy posted increases between 1.3% to 1.75%. Infineon, BMW, SAP, and Volkswagen edged up by nearly 1%. Despite a 2.3% sales drop in 2024, Volkswagen's stock improved, attributed to a 10% decline in China amidst competitive pricing challenges.
In France, companies like Michelin, Societe Generale, Safran, Renault, Credit Agricole, BNP Paribas, Teleperformance, LVMH, and Veolia saw gains ranging from 2% to 3.4%. Stocks such as Stellantis, Orange, Pernod Ricard, Carrefour, Essilor, Vinci, Accor, Bouygues, Hermes International, and Airbus Group rose between 1% and 1.5%. However, Unibail Rodamco fell by nearly 3%, while STMicroElectronics, Edenred, and Kering experienced slight declines.
In the U.K., Persimmon rose by 5.5% following a 7% increase in home completions and an optimistic profit forecast. Several stocks, including St. James's Place, Taylor Wimpey, Ashtead Group, Barratt Redrow, Airtel Africa, Informa, and Convatec Group, gained between 2% and 3%. Meanwhile, Hikma Pharmaceuticals, Pershing Square Holdings, Auto Trader Group, M&G, Rolls-Royce Holdings, IAG, Scottish Mortgage, Rio Tinto, EasyJet, and Legal & General saw increases ranging from 1% to 1.8%. Conversely, JD Sports Fashion plummeted by 7.5%, hitting a near five-year low after cutting its profit guidance. Additionally, BP declined by 2.3%, impacted by the company's forecast of a $100-$300 million reduction in fourth-quarter profits due to weaker refinery margins and reduced production.
**U.S. Economic News**
According to the Labor Department's report on Tuesday, U.S. producer prices rose slightly less than anticipated in December. The producer price index for final demand edged up by 0.2%, following a 0.4% increase in November, while economists had projected a 0.3% rise. However, the annual growth rate in producer prices accelerated to 3.3% in December from 3.0% in November, aligning with projections.
At 10 a.m. ET, Kansas City Federal Reserve President Jeffrey Schmid is expected to discuss the economic and monetary policy outlook at the Central Exchange. Similarly, New York Federal Reserve President John Williams will give opening remarks at the "An Economy That Works for All: Housing Affordability" event at 3:05 p.m. ET.
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