Profit Taking May Contribute To Initial Weakness On Wall Street

Stocks may move to the downside in early trading on Tuesday, giving back ground after moving mostly higher over the course of the previous session. The major index futures are currently pointing to a modestly lower open for the markets, with the S&P 500 futures down by 0.3 percent.

Traders may look to cash in on the recent strength in the markets, which has lifted the major averages to their best levels in over three months.

A negative reaction to some of the latest earnings news from major retailers may also weigh on Wall Street, with shares of Lowe’s (LOW) moving sharply lower in pre-market trading.

The drop by Lowe’s comes after the home improvement retailer reported weaker than expected fiscal third quarter revenues and lowered its full-year sales forecast.

Consumer electronics retailer Best Buy (BBY) may also come under pressure after reporting fiscal third quarter revenues that missed estimates and cutting its full-year sales outlook.

On the other hand, shares of Dick’s Sporting Goods (DKS) are likely to see initial strength after the sporting goods retailer reported better than expected fiscal third quarter results and raised its full-year guidance.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of the minutes of the Federal Reserve’s latest monetary policy meeting this afternoon.

Traders will be looking for the minutes to reinforce recent optimism that the Fed is done raising interest rates in its battle against inflation.

Not long after the start of trading, The National Association of Realtors is due to release its report on existing home sales in the month of October.

Existing home sales are expected to decrease to an annual rate of 3.90 million in October after falling to a rate of 3.96 million in September.

Following the lackluster performance seen to close out the previous week, stocks moved mostly higher during trading on Monday. The tech-heavy Nasdaq led the advance, reaching its best closing level since late July.

The major averages pulled back off their highs going into the close but remained firmly positive. The Nasdaq jumped 159.05 points or 1.1 percent to 14,284.53, the S&P 500 climbed 33.36 points or 0.7 percent to 4,547.38 and the Dow rose 203.76 points or 0.6 percent to 35,151.04.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index edged down by 0.1 percent, while South Korea’s Kospi advanced by 0.8 percent.

Meanwhile, European stocks have moved mostly lower on the day. The U.K.’s FTSE 100 Index is down by 0.6 percent and the French CAC 40 Index is down by 0.4 percent, although the German DAX Index is just above the unchanged line.

In commodities trading, crude oil futures are falling $0.51 to $77.32 a barrel after jumping $1.79 to $77.83 a barrel on Monday. Meanwhile, after slipping $4.40 to $1,980.30 an ounce in the previous session, gold futures are climbing $16.60 to $1,996.90 an ounce.

On the currency front, the U.S. dollar is trading at 147.60 yen compared to the 148.39 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0948 compared to yesterday’s $1.0940.

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