Dipo Olowookere
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to extend the pullback seen over the two previous sessions.
Waning optimism about a near-term interest rate cut may continue to weigh on the markets following last Friday?s better than expected monthly jobs data.
The Labor Department report showing much stronger than expected job growth in the month of June put a big dent in hopes the Federal Reserve will cut interest rates at its next meeting later this month.
Nonetheless, upcoming Congressional testimony from Fed Chairman Jerome Powell may keep some traders on the sidelines.
Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.
The Fed chief is not likely to specifically outline the central bank?s plans to lawmakers, but traders are likely to closely analyze his comments for clues about the outlook for rates.
Stocks came under pressure early in the trading session on Monday and remained mostly lower throughout the day. With the drop on the day, the major averages pulled back further off the record closing highs set last Wednesday.
The major averages ended the day firmly in negative territory but off their lows of the session. The Dow slid 115.98 points or 0.4 percent to 26,806.14, the Nasdaq slumped 63.41 points or 0.8 percent to 8,098.38 and the S&P 500 fell 14.46 points or 0.5 percent to 2,975.95.
The weakness on Wall Street partly reflected waning optimism about a near-term interest rate cut following last Friday’s much better than expected jobs data.
CME Group’s FedWatch Tool still points to a rate cut at the next Federal Reserve meeting later this month, although expectations have dramatically shifted toward a 25 basis point cut rather than a 50 basis point cut.
The shift came after the Labor Department’s closely watched report showed employment jumped by 224,000 jobs in June compared to expectations for an increase of 160,000 jobs.
A notable drop by Apple (AAPL) also weighed on the markets, with the tech giant tumbling by 2.1 percent after Rosenblatt Securities downgraded its rating on the company’s stock to Sell from Neutral.
Fellow Dow component Boeing (BA) also fell by 1.3 percent after Saudi Arabia’s flyadeal became the first airline to officially cancel an order for the beleaguered aerospace giant’s 737 MAX aircraft.
Biotechnology stocks moved sharply lower over the course of the trading session, resulting in a 1.8 percent slump by the NYSE Arca Biotechnology Index.
The biotechnology index continued to give back ground after ending last Wednesday’s trading at its best closing level in well over two months.
Significant weakness was also visible among computer hardware stocks, as reflected by the 1.4 percent drop by the NYSE Arca Computer Hardware Index.
NetApp (NTAP) led the sector lower after Citigroup downgraded its rating on the data storage provider to Sell from Neutral.
Brokerage, networking, and steel stocks also saw considerable weakness on the day, moving to the downside along with most of the other major sectors.
