U.S. stock index futures pointed to a modestly weaker start on Tuesday, suggesting equities could give back some ground after two consecutive sessions of solid gains.
Futures dipped after data from the Commerce Department showed U.S. retail sales unexpectedly stalled in December, raising concerns about the momentum of consumer spending.
According to the report, retail sales were essentially unchanged last month, following a 0.6% increase in November. Economists had been looking for a 0.4% rise. Even after excluding autos — where sales at motor vehicle and parts dealers edged slightly lower — retail activity was still flat, compared with a 0.4% gain in November. Excluding autos, economists had forecast growth of 0.3%.
Separately, figures from the Labor Department showed U.S. import prices rose modestly in December, broadly in line with expectations.
Markets had finished higher on Monday, extending the rally that began late last week. The Dow Jones Industrial Average inched to a fresh record close, while technology stocks powered a stronger advance in the Nasdaq.
By the close, all three major indices were in positive territory. The Dow added 20.20 points, or less than 0.1%, to finish at 50,135.87. The Nasdaq jumped 207.46 points, or 0.9%, to 23,238.67, while the S&P 500 gained 32.52 points, or 0.5%, to 6,964.82.
Much of the strength reflected a continued rebound in technology shares, building on last Friday’s rally. Software stocks were among the leaders, with Oracle (NYSE:ORCL) surging 9.6% after D.A. Davidson upgraded the stock to Buy from Neutral.
Even so, investors appeared hesitant to take on additional risk ahead of several key U.S. economic releases due later this week. At the top of the agenda is the Labor Department’s closely followed monthly employment report, delayed last week by a brief government shutdown.
The jobs report is expected to show payrolls increased by 70,000 in January, up from 50,000 in December, while the unemployment rate is forecast to remain steady at 4.4%.
Upcoming releases on retail sales and consumer price inflation are also likely to draw close scrutiny, given their potential implications for the interest-rate outlook.
“With Jerome Powell nearing the end of his term and Kevin Warsh widely expected to take over as Fed Chair, markets are increasingly sensitive to how data influences rate expectations,” said Daniela Hathorn, Senior Market Analyst at Capital.com. “While leadership changes may affect tone and communication, the data remains the ultimate driver.”
She added, “As a result, the employment and inflation releases this week will be critical in determining whether markets lean back into expectations of easing — a scenario that could support equities and precious metals — or whether sticky inflation forces continued restraint.”
Gold-related stocks were among the strongest performers on Monday, tracking a sharp rise in bullion prices that lifted the NYSE Arca Gold Bugs Index by 6.1%.
Networking and software stocks also posted notable gains, with the NYSE Arca Networking Index climbing 4% and the Dow Jones U.S. Software Index rising 3.3%. Brokerage and semiconductor shares also advanced, while healthcare and airline stocks lagged the broader market.