By Investors Hub
The major U.S. index futures are pointing to a higher opening on Tuesday following the sell-off seen over the course of the two previous sessions.
Bargain hunting is likely to contribute to initial strength on Wall Street, with traders picking up stocks at reduced levels on the heels of the sharp drops seen Friday and Monday.
The pullback seen yesterday afternoon pulled the Dow down to its lowest closing level in over eight months, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in over a year.
Trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve?s monetary policy announcement on Wednesday.
The Fed is widely expected to raise interest rates by a quarter point, although traders are likely to closely scrutinize the central bank’s accompanying statement and forecasts for clues about future rate hikes.
Stocks showed wild swings over the course of the trading session on Monday before ending the day substantially lower. With the sell-off on the day, the Dow fell to its lowest closing level in over eight months, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in over a year.
The major averages climbed off their lows of the session going into the close but remained firmly negative. The Dow plummeted 507.53 points or 2.1 percent to 23,592.98, the Nasdaq tumbled 156.93 points or 2.3 percent to 6,753.73 and the S&P 500 plunged 54.01 points or 2.1 percent to 2,545.94.
The sharply lower close on Wall Street came amid lingering concerns about global economic growth as well as continued uncertainty about trade between the U.S. and China.
Traders were also on edge ahead of the Federal Reserve’s highly anticipated monetary policy announcement scheduled for Wednesday.
Negative sentiment was also generated by some disappointing U.S. economic data, including a report from the National Association of Home Builders unexpectedly showing a continued deterioration in confidence in the month of December.
The report said the NAHB/Wells Fargo Housing Market Index dropped to 56 in December after tumbling to 60 in November. Economists had expected the index to inch up to 61.
With the unexpected monthly decrease, the housing market index tumbled to its lowest level since hitting 54 in May of 2015.
NAHB Chief Economist Robert Dietz called the housing slowdown an “early indicator of economic softening.”
A separate report from the New York Federal Reserve showed a much bigger than expected slowdown in the pace of growth in regional manufacturing activity in December.
Tobacco stocks moved sharply lower over the course of the trading session, dragging the NYSE Arca Tobacco Index down by 4.2 percent. With the steep drop, the index ended the session at its lowest closing level in well over two years.
Substantial weakness was also visible among interest rate-sensitive commercial real estate and utilities stocks, with the Dow Jones Real Estate Index and the Dow Jones Utilities Average plunging by 3.8 percent and 4.3 percent, respectively.
Within the utilities sector, PG&E Corp. (PCG) saw significant weakness on news the California Public Utilities Commission is considering penalties against the company for systemic violations of rules to prevent damage to natural gas pipelines during excavation activities.
Software, retail, telecom and computer hardware stocks also saw considerable weakness amid another broad based sell-off on Wall Street.
Meanwhile, gold stocks were among the few groups to buck the downtrend, resulting in a 2.7 percent jump by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a notable increased by the price of the precious metal.
