U.S. stocks could open on a negative note on Tuesday after the averages maintained a cautious stance last week. Futures of all three major indices were slightly down on Tuesday, pointing to a cautious sentiment on Wall Street.
Economic data and Federal Reserve chair Jerome Powell's comments about the future of rate cuts dampened the sentiment. Powell said the Federal Open Market Committee (FOMC) is not in a hurry after economic data showed strength.
Geopolitical tensions are weighing on investor sentiment, as Russian President Vladimir Putin expanded the country's nuclear doctrine, according to reports by the TASS news agency.
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.36% |
| S&P 500 | -0.47% |
| Dow Jones | -0.62% |
| R2K | -1.29% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY fell 0.35% to $586.11 and the Invesco QQQ ETF QQQ declined 0.29% to $498.58, according to Benzinga Pro data.
Cues From Last Session:
U.S. stocks closed on a mixed note on Monday, with the Dow Jones closing in the red while the Nasdaq and S&P 500 edged up.
Crude oil prices remained under the $70 mark, edging lower after rebounding due to disruptions in Norway.
Treasury yields eased marginally amid a broader risk-off sentiment.
On the economic data front, the NAHB/Wells Fargo Housing Market Index climbed to 46 in November from 43 in October, recording the highest reading in seven months.
Most sectors on the S&P 500 closed on a positive note, with energy, communication services, and consumer discretionary stocks recording the biggest gains on Monday.
However, industrial stocks bucked the overall market trend, closing the session lower.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | 0.60% | 18,791.81 |
| S&P 500 | 0.39% | 5,893.62 |
| Dow Jones | -0.13% | 43,389.60 |
| Russell 2000 | 0.11% | 2,306.34 |
Insights From Analysts:
Tom Lee, head of research at FundStrat Global Advisors, noted in an interview with CNBC that the "Trump trade" is still intact despite it losing some steam over the past week.
He underscored that as uncertainty reduces around President-elect Donald Trump's announcement of Treasury Secretary, it will be a "clearing event" for the markets.
He also believes that although Fed chair Powell said there is no need to rush with rate cuts, the expectations for the number of cuts over the next year remain the same. Essentially, it's only a matter of timing, according to Lee.
With Nvidia Corp. NVDA set to announce its results this week, Lee thinks that it will be another "clearing event" for the markets.
"Markets get very hesitant in front of Nvidia's earnings. Once that is behind us, we'll see that the demand is strong and I think markets breathe a sigh of relief."
WisdomTree and Wharton School economist Jeremy Siegel reiterated his bull thesis but noted that higher rates could lead to some volatility in the near term.
"Equities still offer superior returns over the longer term compared to bonds," he said, as investors turn their eye towards the Federal Open Market Committee's (FOMC) next meeting.
Expectations of a further 25 basis point rate cut in December have fallen to just 65% now, down from 72% last week, according to CME Group's FedWatch tool.
"With long-term rates climbing, the market's trajectory will depend heavily on not only economic data but a clarification Trump's policies on tariffs and deportations," Siegel said.
On the whole, the Wharton economist underscored that "companies with strong balance sheets and pricing power" are best positioned to weather this higher-rate environment.
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Upcoming Economic Data
Tuesday's economic calendar is fairly light.
- Data on new home construction and building permits will be released at 8:30 a.m. ET.
- Chicago Fed President Austan Goolsbee will speak at 12:25 p.m. ET.
Stocks In Focus:
- Tesla Inc. TSLA shares continued to rally, gaining 5.6% on Monday amid reports of Trump's transition team looking to ease self-driving rules.
- Alphabet Inc.'s GOOG GOOGL subsidiary Google is staring at the prospect of divesting the Chrome web browser as part of the Department of Justice's (DOJ) latest antitrust move. The company's stock fell in premarket trading on Tuesday.
- Super Micro Computer Inc. SMCI shares surged over 30% in premarket trading on Tuesday after the company submitted a compliance plan to continue trading on the Nasdaq.
- Trump Media & Technology Group Corp. DJT shares were down 4.7% in premarket trading after reports suggested that it is looking to acquire cryptocurrency company Bakkt Holdings BKKT.
- Investors are awaiting earnings results from Walmart Inc. WMT, Lowe’s Companies, Inc. LOW, and Medtronic Plc. MDT today.
Commodities, Bonds And Global Equity Markets:
Crude oil futures surged in the early New York session, falling by 0.7% to hover around $68.69 per barrel.
The 10-year Treasury note yield eased marginally to 4.365%.
Major Asian markets ended in the green on Tuesday, while European stocks declined in early trading.
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