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Futures Pointing to Pullback on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Tuesday following the strong upward move seen last week.

Profit taking may contribute to initial weakness on Wall Street, although trading activity may remain somewhat subdued ahead of the release of the minutes of the latest Federal Reserve meeting on Wednesday.

Stocks moved mostly higher in morning trading on Friday but turned mixed over the course of the session. The major averages eventually ended the day on opposite sides of the unchanged line.

While the Dow and the S&P 500 closed higher for sixth consecutive session, the tech-heavy Nasdaq dipped 16.96 points or 0.2 percent to 7,239.47. The Dow edged up 19.01 points or 0.1 percent to 25,219.38 and the S&P 500 inched up 1.02 points or less than a tenth of a percent to 2,732.22.

Despite the mixed performance on the day, the major averages all moved sharply higher for the week. The Nasdaq spiked by 5.3 percent, while the Dow and the S&P 500 both surged up by 4.3 percent.

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The mixed close on Wall Street came after Special Counsel Robert Mueller’s office revealed that a federal grand jury has indicted several Russian nationals for allegedly interfering in the 2016 presidential election.

The indictment does not allege collusion between the Russians and President Donald Trump’s campaign but could still cause headaches for the president.

The strength seen earlier in the day came as traders once again shrugged off further indications of rising inflation, with a report from the Labor Department showing import prices jumped by more than expected in the month of January.

The Labor Department said import prices surged up by 1.0 percent in January after edging up by a revised 0.2 percent in December.

Economists had expected import prices to climb by 0.6 percent compared to the 0.1 percent uptick originally reported for the previous month.

The report also said export prices increased by 0.8 percent in January after inching up by a revised 0.1 percent in December.

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Export prices had been expected to rise by 0.3 percent compared to the 0.1 percent drop originally reported for the previous month.

A separate report from the Commerce Department showed a much bigger than expected rebound in new residential construction in January.

The Commerce Department said housing starts soared by 9.7 percent to an annual rate of 1.326 million in January after tumbling by 6.9 percent to a revised 1.209 million in December.

Economists had expected housing starts to climb by 3.5 percent to an annual rate of 1.234 million from the 1.192 million originally reported for the previous month.

Building permits, an indicator of future housing demand, also surged up by 7.4 percent to an annual rate of 1.396 million in January from the revised December rate of 1.300 million.

The University of Michigan also released a report unexpectedly showing a significant improvement in consumer sentiment in the month of February.

The preliminary reading on the consumer sentiment index for February came in at 99.9, up from the final January reading of 95.7. Economists had expected the index to edge down to 95.5.

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“Consumer sentiment rose in early February to its second highest level since 2004 despite lower and much more volatile stock prices,” said Richard Curtin, the survey’s chief economist.

Curtin said stock market gyrations were overshadowed by rising incomes, employment growth, and net favorable perceptions of tax reform.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Pharmaceutical stocks saw considerable strength, however, with the NYSE Arca Pharmaceutical Index climbing by 1 percent.

Biopharmaceutical company Alkermes (ALKS) posted a standout gain, surging up by 5.5 percent to a two-year closing high.

On the other hand, substantial weakness was visible among gold stocks, as reflected by the 2.3 percent slump by the NYSE Arca Gold Bugs Index. Gold stocks came under pressure despite a modest increase by the price of the precious metal.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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