Benzinga - by Shanthi Rexaline, Benzinga Editor.
Stocks are poised for a weaker start on Tuesday after the Labor Day break. Bargain hunting may trigger some selling, and traders will focus on Federal Reserve speeches this week. Bond yields, after a recent dip, have edged up. Concerns also linger from underwhelming service sector data in China and Europe. August’s auto sales figures might also sway trading for the day.
Cues From Last Week’s Trading
The major averages closed the week ended Sept. 1 on an upbeat note, as stocks rebounded from the slump seen for much of August. The market witnessed a relief rally early in the week post the Jackson Hole meeting. As the labor market, consumer confidence, and GDP data all came in weaker than expected, the market went into a risk-on mode.
US Index Performance In Week Ended Sept. 1
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +3.25% | 14,031.81 |
| S&P 500 Index | +2.50% | 4,515.77 |
| Dow Industrials | +1.43% | 34,837.71 |
| Russell 2000 | +3.63% | 1,920.83 |
Analyst Color:
The U.S. economy is in a good state, said Fund Strat analyst Tom Lee. The August job report was very good news, as it showed a higher supply of workers and softer labor demand, he said, adding that the combination is supportive of a soft landing and is good for equities.
The “supercore” inflation that the Fed cites is a distorted measure, as it includes auto services, healthcare, and other factors, which are not factors targeted or impacted by monetary policy, he said.
That said, Lee sees looming concerns such as the UAW strike that could cripple operations at General Motors Corp. (NYSE:GM) and Ford Motor Co. (NYSE:F), and the surge in the federal deficit, which has doubled to $2 trillion this year.
Much of the ballooning deficit is due to growing spending, entitlements, and interest burden, Lee said. “This might also explain why U.S. yields are rising in 2023,” he added.
Futures Today
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.21% |
| S&P 500 | -0.10% |
| Dow | -0.01% |
| R2K | -0.68% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) retreated 0.14% to $450.58 and the Invesco QQQ ETF (NASDAQ:QQQ) slipped 0.23% to $376.74, according to Benzinga Pro data.
Upcoming Economic Data:
The Federal Reserve takes center stage, with a slew of Fed speeches and the central bank's Beige Book on tap this week. Traders may also keep an eye on the service sector activity data, the revised second-quarter productivity and costs report, and the initial jobless claims data.
The Commerce Department is scheduled to release its factory goods orders report for July at 10 a.m. EDT. Economists, on average, expect factory goods orders to have seen a 2.5% month-over-month drop following a 2.3% increase in June.
The Treasury will auction three- and six-month bills at 11:30 a.m. EDT.
See also: How To Trade Futures
Stocks In Focus:
Fidelity National Financial, Inc. (NYSE:FNF) rose over 7% in premarket trading after a 13F filed by Citi showed the latter increased its stake in the company.
AeroVironment, Inc. (NASDAQ:AVAV), Asana, Inc. (NYSE:ASAN), GitLab, Inc. (NASDAQ:GTLB) and Zscaler, Inc. (NASDAQ:ZS) are among the companies due to release their quarterly results after the market close.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures edged down 0.14% to $85.43 in the early European session on Tuesday following a 7.2% jump in the week ended Sept. 1. The past week's strength came on the back of the dollar's weakness in the wake of the weak domestic economic data.
The benchmark 10-year Treasury note rose 0.049 percentage points to 4.222% on Tuesday.
Most Asian markets fell on Tuesday amid worries concerning China and a lack of cues from Wall Street. Hong Kong's Hang Seng led the slide with a 2.06% plunge and the Chinese, Malaysian and New Zealand markets saw moderate weakness. On the other hand, the Japanese and the Indian markets ended higher for the day.
The Reserve Bank of Australia kept its key interest rate unchanged at 4.10%, while the Caixin services sector survey showed a slower-than-expected expansion in China.
European stocks were mostly lower by late-morning trading on Tuesday as traders digested the results of the euro area's service sector survey. The service sector in the 20-nation economy contracted by more than expected in August.
Read Next: Why This Economist Thinks Escaping This Recession ‘Will Be Like A Miracle’: ‘We Have Had Biggest Interest Rate Shock Since 1981’
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