Benzinga - by Shanthi Rexaline, Benzinga Editor.
Sentiment continues to be guarded as traders look ahead to a two-day monetary policy meeting that kickstarts on Tuesday. Oil is northward bound, and bond yields are flatlining after their Monday’s gains. The focus will likely be on the United Auto Workers union strike as it enters its fifth day. A housing market report ahead of the market opening could also create some ripples in the market. The underlying mood will likely be one of caution as traders look ahead to the Fed’s thinking on the future rate trajectory.
Cues From Monday’s Trading:
Stocks showed listlessness on Monday, characteristic of pre-Fed meeting sessions, although they ended marginally higher. The major indices started lower and saw more weakness in early trading, but buying interest picked up following the release of housing market data that showed receding builder confidence.
After peaking by the mid-session, the indices gave most of the gains throughout the session amid rising bond yields and crude oil prices and yet closed just above the unchanged. Small-cap stocks, however, came under pressure and stayed below the flat line for the bulk of the session.
Consumer discretionary and real estate stocks came under intense selling, while gains by energy stocks and, to some extent, by technology and communication services stocks helped mitigate the weakness.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.01% | 13,710.24 |
| S&P 500 Index | +0.07% | 4,453.53 |
| Dow Industrials | +0.02% | 34,624.30 |
| Russell 2000 | -0.69% | 1,834.30 |
Analyst Color:
The market still has positive momentum and can tilt upward towards the end of the year, said Wharton Professor Jeremy Siegel in his weekly WisdomTree commentary. “I don't see a strong boom but an upward tilt,” the economist said.
Siegel also said a major crack in tech stock performance is unlikely unless their earnings disappoint. He viewed the good reception to Arm Holdings plc (NASDAQ:ARM) last week as positive, marking a good re-opening of the IPO markets. “I think that is a healthy reopening and shows there’s still appetite for risk,” he added.
“I like the valuations of dividend stocks more than the valuations of tech heavy Nasdaq, particularly on a more robust economy, but you can still see the money flowing into tech stocks with the artificial intelligence (AI) narrative dominating enthusiasm,” Siegel said.
Futures Today
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.12% |
| S&P 500 | +0.13% |
| Dow | +0.14% |
| R2K | +0.35% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.16% to $444.36, and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.15% to $371.20, according to Benzinga Pro data.
Upcoming Economic Data:
The Commerce Department is scheduled to release its housing starts report for August at 8:30 a.m. EDT. Economists, on average, expect housing starts to come in at a seasonally adjusted annual rate of 1.440 million units, down from 1.452 million units in July. Building permits, a measure of future housing activity, are also expected at 1.440 million units compared to July’s 1.443 million units.
The Federal Open Market Committee’s September meeting gets underway at 10:30 a.m. EDT.
The Treasury will auction 20-year bonds at 1 p.m. EDT.
See also: Best Futures Trading Software
Stocks In Focus:
- United States Steel Corporation (NYSE:X) rose over 1% in premarket trading following a positive preannouncement.
- Nio, Inc. (NYSE:NIO) shed about 5% in reaction to its $1 billion convertible note offering.
- Apogee Enterprises, Inc. (NASDAQ:APOG) and AutoZone, Inc. (NYSE:AZO) are among the companies reporting earnings ahead of the market open.
- Steelcase, Inc. (NYSE:SCS) will report its quarterly results after the close.
Crude oil futures climbed 0.94% to $91.43in early European session on Tuesday following a 0.21% pullback on Monday.
On Tuesday, the benchmark 10-year Treasury note edged down 0.01 percentage points to 4.309%.
Most Asian markets pulled back on Tuesday, with traders biding their time to see off the Fed meeting. The Indian market remained close for a public holiday, while the New Zealand and Hong Kong markets advanced.
European stocks were higher in late-morning trading amid the eurozone region’s release of in-line inflation data.
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