US Stocks Show Tentativeness On Tuesday As Traders Wait On Word From Fed Chair Jerome Powell

U.S. stocks look set to start Tuesday’s session on a nervous note as traders may prefer to wait and watch the inflation data before making their next moves.

What Happened: Fed officials, who made public appearances on Monday, hinted at basing the magnitude of the next fed fund rate hike on the December inflation data due on Thursday.

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On Monday, the market squandered the morning session's gains and declined through the afternoon to close on a mixed note. Selling set in as traders sifted through the comments of two Fed officials. The broader S&P 500 Index, which was up a little over 1.5% points in early afternoon trading, gave back all the gains thereafter and ended marginally lower.

Technology, consumer discretionary, material and utility stocks saw marked strength, while consumer staple and healthcare stocks came under selling pressure.

“After underestimating the inflation surge last year, the Fed and markets may be erring on the other side this year,” LPL Financial analysts said in a note. “The forces now pushing down on inflation are getting stronger, which may keep interest rates down and stock valuations supported this year,” they added.

Here’s a peek into index futures trading:

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE: SPY) eased 0.06%, to $387.63, and the Invesco QQQ Trust (NASDAQ: QQQ) edged up 0.10%, to $270.80, according to Benzinga Pro data.

On the economic front, the National Federation of Independent Business’ “Small Business Optimism index,” which provides insights into the health of small businesses in the U.S., is due at 6 a.m. EST. The index came in at 91.9 in November.

The weekly Redbook index, a sales-weighted index of year-over-year same-sales growth of a sample of large U.S. general merchandise retailers, is scheduled to be released at 8:55 a.m. EST.

Fed Chair Jerome Powell is scheduled to speak at 9 a.m. EST.

At 10 a.m. EST, the Commerce Department is set to release the wholesale trade and inventories data for November. Sales and inventories are expected to increase 0.5% and 1%, respectively, compared to the previous month.

The Energy Information Administration is scheduled to release its short-term energy outlook at 12 p.m. EST.

The Treasury will auction three-year notes at 1 p.m. EST.

Stocks In Focus:

• Tesla Inc. (NASDAQ: TSLA) shares were extending their gains, up about 1.8% in premarket trading.
• Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) could react to its quarterly and December revenue that trailed expectations.
• Shares of Soterra Health Inc. (NASDAQ: SHC), a service provider for the healthcare industry, soared over 50% after it announced settlement agreements regarding 870 ethylene oxide cases.
• Illumina Inc. (NASDAQ: ILMN) fell over 8% after the company announced below-consensus guidance for 2023 at a presentation at the JPM Healthcare Conference. The news of the conference could move stocks in the healthcare space.
• Broadcom Inc. (NASDAQ: AVGO) slipped over 1% after a Bloomberg report said Apple Inc. (NASDAQ: AAPL) was looking to diversify away from the chipmaker and will move the manufacturing of a key component, now sourced from Broadcom, in-house by 2025.

Commodities, Other Global Markets:

Crude oil futures were higher for a second straight day, with a barrel of WTI-grade oil trading up over 0.40% at $74.94.

The yield on the benchmark 10-year Treasury note languished around the 3.55% level.

The Asia-Pacific markets meandered to a mixed close on Tuesday, as traders reacted to an uninspiring lead from Wall Street overnight, while the European stocks were uniformly in the red in late morning deals.

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