Wall Street Opens Flat After Monday’s Rally
By Investors Hub
The major U.S. index futures are pointing to a roughly flat opening on Tuesday following the rally seen in the previous session.
Uncertainty about the near-term outlook for the markets may keep some traders on the sidelines after yesterday?s advance lifted the Dow and the Nasdaq to nearly six-month closing highs.
Traders may be looking for more concrete developments out of ongoing U.S.-China trade talks before making more significant moves.
Additionally, a report from the Commerce Department may partly offset the positive sentiment generated by the upbeat manufacturing data released on Monday.
The report showed a steep drop in durable goods orders in the month of February, although the decrease was largely due to a nosedive in orders for transportation equipment.
Stocks showed a substantial move to the upside during the trading day on Monday, adding to the strong gains posted last week. With the upward move, the Dow and the Nasdaq ended the session at their best closing levels in nearly six months.
The major averages reached new highs late in the session but gave back ground going into the close. The Dow jumped 329.74 points or 1.3 percent to 26,258.42, the Nasdaq soared 99.59 points or 1.3 percent to 7,828.91 and the S&P 500 surged up 32.79 points or 1.2 percent to 2,867.19.
The rally on Wall Street reflected continued optimism about U.S.-China trade talks as well as a positive reaction to upbeat U.S. and Chinese manufacturing data.
Official data showed Chinese manufacturing activity unexpectedly grew for the first time in fourth months in March. A private survey also showed the manufacturing sector in the world’s second biggest economy returning to growth.
Additionally, Beijing announced that it will continue to suspend additional tariffs on U.S. vehicles and auto parts after April 1 as a gesture after Washington delayed tariff hikes on Chinese imports.
A delegation led by Chinese Vice Premier Liu He is headed to Washington later this week for another round of trade talks.
Further buying interest was generated by a report from the Institute for Supply Management unexpectedly showing a faster rate of growth in U.S. manufacturing activity in the month of March.
The ISM said its purchasing managers index rose to 55.3 in March after falling to 54.2 in February, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to come in unchanged.
“Comments from the panel reflect continued expanding business strength, supported by gains in new orders and employment,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee.
Meanwhile, traders largely shrugged off a Commerce Department report showing an unexpected decrease in U.S. retail sales in February, as the report also showed a significant upward revision to the increase in sales in the previous month.
The report said retail sales dipped by 0.2 percent in February after climbing by an upwardly revised 0.7 percent in January.
Economists had expected sales to rise by 0.3 percent compared to the 0.2 percent uptick originally reported for the previous month.
Excluding a rebound in sales by motor vehicle and parts dealers, retail sales fell by 0.4 percent in February after jumping by a revised 1.4 percent in January.
Ex-auto sales had been expected to climb by 0.4 percent compared to the 0.9 percent increase originally reported for the previous month.
Oil service stocks saw considerable strength on the day, driving the Philadelphia Oil Service Index up by 3.4 percent. The strength in the sector came amid a sharp increase by the price of crude oil.
Steel stocks also moved sharply higher over the course of the trading session, as the upbeat manufacturing data generated optimism about global demand. Reflecting the strength in the steel sector, the NYSE Arca Steel Index spiked by 3.3 percent.
Significant strength was also visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index soaring by 3.2 percent and 2.9 percent, respectively.
Semiconductor, transportation, and computer hardware stocks also moved notably higher, while gold stocks bucked the uptrend amid a decrease by the price of the precious metal.