The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to see further downside following the pullback to close out 2023.
Profit taking may contribute to initial weakness on the first trading day of the new year, as some traders look to cash in on last year’s substantial gains.
The tech-heavy Nasdaq skyrocketed by 43.4 percent in 2023, while the S&P 500 soared by 24.2 percent and the Dow surged by 13.7 percent.
A steep drop by shares of Apple (AAPL) may also weigh on the markets, with the tech giant tumbling by 2.2 percent in pre-market trading.
The slump by Apple comes after Barclays downgraded its rating on the company’s stock to Underweight from Equal Weight.
Nonetheless, some traders may remain away from their desks following the New Year’s Day holiday, looking ahead to the release of some key U.S. economic data in the coming days.
The Labor Department’s monthly jobs report is likely to be in focus, while reports on manufacturing and service sector activity may also attract attention along with the minutes of the latest Federal Reserve meeting.
Following the lackluster performance seen in recent sessions, stocks fluctuated over the course of the trading session on Friday before ending the day mostly lower.
The major averages showed a lack of direction in early trading but slid more firmly into negative territory as the session progressed.
Despite an afternoon recovery attempt, the major averages all finished the day in the red. The Dow edged down 20.56 points or 0.1 percent to 37,689.54, the Nasdaq slid 83.78 points or 0.6 percent at 15,011.35 and the S&P 500 fell 13.52 points or 0.3 percent to 4,769.83.
The major averages still posted substantial gains for the year. The Nasdaq skyrocketed by 43.4 percent, the S&P 500 soared by 24.2 percent and the Dow surged by 13.7 percent.
The lower close on Wall Street may partly have reflected profit taking, as some traders looked to cash in on the recent strength in the markets.
Traders previously seemed hesitant to cash in on the recent gains amid concerns about missing out on further upside but apparently decided the final trading day of the year was the right time to lock in some profits.
Overall trading activity remained relatively subdued, however, with some traders looking to get a head start on New Year’s festivities.
Trading activity may pick back up next week, as the Labor Department is scheduled to release its closely watched monthly jobs report next Friday.
Reports on manufacturing and service sector activity may also attract attention along with the minutes of the latest Federal Reserve meeting.
In U.S. economic news, MNI Indicators released a report showing a substantial downturn by Chicago-area business activity in the month of December.
MNI Indicators said its Chicago business barometer tumbled to 46.9 in December from 55.8 in November, with a reading below 50 indicating contraction. Economists had expected the index to drop to 51.0.
Airline stocks showed a significant move to the downside on the day, dragging the NYSE Arca Airline Index down by 2.0 percent.
Considerable weakness also emerged among commercial real estate stocks, as reflected by the 1.2 percent loss posted by the Dow Jones U.S. Real Estate Index. The index ended Thursday’s trading at a ten-month closing high.
Oil service stocks also moved notably lower amid a modest decrease by the price of crude oil, while weakness was also visible among networking, computer hardware and steel stocks.