U.S. Stocks May Move Back To The Downside In Early Trading

(RTTNews) - The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to move back to the downside after recovering from an early slump to end the previous session slightly higher.

Profit taking may contribute to initial weakness on Wall Street, as some traders look to cash in on the strong upward move seen over the past several weeks.

The major averages have climbed well off their April lows amid easing trade concerns, with the Nasdaq and the S&P 500 reaching their best levels in almost three months.

However, JPMorgan Chase (JPM) CEO Jamie Dimon has warned stock market values may not properly represent the risks of higher inflation and even stagflation.

"My own view is people feel pretty good because you haven't seen effective tariffs," Dimon said during the financial giant's annual investor day meeting on Monday. "The market came down 10%, [it's] back up 10%. That's an extraordinary amount of complacency."

On the other hand, Carson Group chief market strategist Ryan Detrick told CNBC the rebound should be taken seriously even amid lingering concerns about trade and the economy.

"All these worries and concerns are real. We're not ignoring everything that's out there," Detrick said. "But are we listening to what the market's doing, right?

"The previous 27 trading days, the S&P 500 is up close to 20 percent," he added. "That's not a bear market rally. That's not a short-covering rally,"

Stocks came under pressure early in the session on Monday but regained ground over the course of the trading day. The major averages climbed well off their lows of the session before ending the day modestly higher.

The Dow fell more than 300 points in early trading but ended the day up 137.33 points or 0.3 percent at 42,792.07. The S&P 500 also inched up 5.22 points or 0.1 percent to 5,963.60, while the Nasdaq crept up 4.36 points or less than a tenth of a percent to 19,215.46.

The initial weakness on Wall Street came as traders looked to cash in on last week's rally, which lifted the major averages to their best closing levels in over two months.

Last Monday's news of a U.S.-China trade deal temporarily slashing steep tariffs on each other's goods generated considerable buying interest that carried over throughout much of the week.

Negative sentiment was also generated in reaction to news that Moody's has downgraded the U.S. debt rating by a notch to Aa1 from Aaa.

Moody's said the downgrade reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.

Selling pressure waned over the course of the session, however, as traders seem to remain generally optimistic about the outlook for the markets.

On the U.S. economic front, the Conference Board released a report showing its reading on leading U.S. economic indicators slumped by more than expected in the month of April.

The report said the leading economic index tumbled by 1.0 percent in April after sliding by a downwardly revised 0.8 percent in March.

Economists had expected the leading economic index to decrease by 0.8 percent compared to the 0.7 percent drop originally reported for the previous month.

Gold stocks saw substantial strength on the day, as the price of the precious metal surged in reaction to Moody's downgrade of the U.S. debt rating. Reflecting the strength in the sector, the NYSE Arca Gold Bugs Index jumped by 2.2 percent.

Biotechnology, healthcare and brokerage stocks also saw some strength, while energy stocks moved to the downside despite an increase by the price of crude oil.

Commodity, Currency Markets

crude oil futures are slipping $0.17 to $62.52 a barrel after rising $0.20 to $62.69 a barrel on Monday. Meanwhile, after jumping $46.30 to $3,233.50 an ounce in the previous session, gold futures are climbing $12.50 to $3,246 an ounce.

On the currency front, the U.S. dollar is trading at 144.77 yen compared to the 144.86 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1233 compared to yesterday's $1.1240.

Asia

Asian stocks ended mostly higher on Tuesday after China and Australia cut interest rates as expected. Investors stayed focused on the outcome of U.S. trade negotiations with India and Japan following a 90-day pause on reciprocal tariffs between the U.S. and China.

Meanwhile, after the U.S. warned companies against using Huawei's Ascend chips, China accused the Trump administration of undermining recent trade truce talks in Geneva. China demanded the U.S. "correct its mistakes."

The U.S. dollar pulled back on concerns about rising debt and tariff uncertainty and gold traded weak around $3,220 per ounce levels, while oil prices were mixed in Asian trading.

China's Shanghai Composite Index rose 0.4 percent to 3,380.48 after the People's Bank of China cut benchmark lending rates for the first time since October.

The People's Bank of China lowered its one-year loan prime rate (LPR), a key reference for household and business lending, to 3.0 percent from 3.1 percent, while the five-year LPR, typically used for mortgages, was cut by 10 basis points to 3.5 percent.

Hong Kong's Hang Seng Index rallied 1.5 percent to 23,681.48 as tech stocks like Alibaba and Baidu surged on Beijing's growth push.

Japanese markets ended on a flat note, giving up early gains supported by a weaker yen. The Nikkei 225 Index and the broader Topix Index both finished marginally higher at 37,529.49 and 2,738.83, respectively, ahead of potential currency talks this week between the U.S. and Japan.

Export-linked Sony surged 4.6 percent, Nvidia supplier Advantest climbed 3 percent and peer Tokyo Electron added 1.2 percent.

Seoul stocks ended lower for a second day running, with the Kospi finishing marginally lower at 2,601.80, dragged down by automakers and battery stocks. Semiconductor and energy shares advanced, helping limit overall losses in the broader market.

Australian stocks edged higher as the Reserve Bank of Australia cut rates again to a two-year low, as expected. The benchmark S&P/ASX 200 Index gained 0.6 percent to close at 8,343.30, led by tech and real estate stocks. The broader All Ordinaries Index settled 0.6 percent higher at 8,573.40.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index edged up by 0.1 percent to 12,644.23.

Europe

European shares have moved mostly higher on Tuesday as investors watch the latest developments on the trade front and react to widely expected rate cuts in China to stimulate consumption and loan growth.

The U.K.'s FTSE 100 Index is up by 0.7 percent, the French CAC 40 Index is up by 0.6 percent and the German DAX Index is up by 0.5 percent.

British engineering firm Senior Plc has shown a strong move to the upside after securing two new contracts valued at about €200 million.

Diploma Plc shares have also soared. The technical products and service distributor raised its full-year organic revenue growth forecast after reporting robust half-year financial growth.

Smiths Group has also rallied. The conglomerate said annual organic revenue growth would reach the top end of its 6-8 percent forecast range.

Energy supplier Centrica has also jumped. The company and its subsidiary Spirit Energy have reduced their stake in the UK North Sea's biggest gas field to Ithaca Energy in a deal worth £215million.

Telecom major Vodafone has also moved notably higher after launching a share buyback program.

Renewable energy firm Oersted and Vestas Wind have also surged after the Trump administration lifted a month-long stop-work order on the $5 billion Empire Wind offshore project.

In economic news, German producer prices declined at the fastest pace in six months in April largely due to lower energy prices, Destatis reported. Producer prices fell 0.9 percent on a yearly basis in April, following a 0.2 percent drop in March.

This was the second consecutive decrease and also marked the biggest fall since October. Prices were expected to drop more moderately by 0.6 percent.

U.S. Economic News

Richmond Federal Reserve President Thomas Barkin is scheduled to speak on growth in rural communities before the "Elevating What Works" 2025 Investing in Rural America Conference at 9 am ET.

Also at 9 am ET, Atlanta Federal Reserve President Raphael Bostic is due to deliver welcome back remarks before the 2025 Financial Markets Conference.

St. Louis Federal Reserve President Alberto Musalem is scheduled to speak on the U.S. economy and monetary policy in a moderated conversation before the Economic Club of Minnesota at 1 pm ET.

At 5 pm ET, Federal Reserve Board Governor Adriana Kugler is due to deliver the commencement address before the Spring 2025 Berkeley Economics Commencement Ceremony.