Dow Jones, S&P 500 and Nasdaq index futures are currently pointing to a higher open on Tuesday, with stocks likely to move back to the upside following the modest pullback seen in the previous session.
A positive reaction to some of the latest earnings news may contribute to early strength on Wall Street even as traders keep an eye on the latest developments in the Middle East.
Shares of UnitedHealth (NYSE:UNH) are surging by 7.2 percent in pre-market trading after the health insurance giant reported better than expected first quarter results and raised its full-year earnings guidance.
Homebuilder D.R. Horton (NYSE:DHI) is also seeing significant pre-market strength after reporting first quarter earnings that exceeded analyst estimates.
On the other hand, shares of 3M (NYSE:MMM) may come under pressure after the conglomerate reported better than expected first quarter earnings but provided disappointing full-year guidance.
Early buying interest may also be generated in reaction to a Commerce Department report showing retail sales in the U.S. surged by more than expected in the month of March.
The report said retail sales shot up by 1.7 percent in March after climbing by an upwardly revised 0.7 percent in February.
Economists had expected retail sales to jump by 1.4 percent compared to the 0.6 percent increase originally reported for the previous month.
Excluding sales by motor vehicle and parts dealers, retail sales surged by 1.9 percent in March after growing by 0.7 percent in February. Ex-auto sales were expected to leap by 1.3 percent.
However, traders may be reluctant to make significant moves as they await further news about potential peace talks between U.S. and Iran as the end of their ceasefire looms.
“Oil prices remained below $100 a barrel which suggests cautious optimism that the Middle East conflict won’t intensify,” said Russ Mould, investment director at AJ Bell.
He added, “However, the longer oil remains in the 90s range (currently $95), the higher the chance of an inflationary shock and a wobble to global economic activity.”
Following the substantial rally seen last week, stocks saw a modest pullback during trading on Monday. The major averages all moved to the downside, although selling pressure was relatively subdued.
The major averages finished the day well off their lows of the session but still in the red. The Nasdaq fell 64.09 points or 0.3 percent to 24,404.39, the S&P 500 dipped 16.92 points or 0.2 percent to 7,109.14 and the Dow edged down 4.87 points or less than a tenth of a percent to 49,442.56.
The modest weakness on Wall Street came amid concerns about the re-escalation of tensions between the U.S. and Iran following the latest developments in the Middle East.
Over the weekend, Iran once again closed the Strait of Hormuz and purportedly fired on tankers in the vital waterway, blaming the U.S. blockade of Iranian ports for the moves.
President Donald Trump called Iran’s actions a “total violation” of the ceasefire agreement between the U.S. and Iran, which is currently set to expire this week.
In a post on Truth Social, Trump also said he is sending representatives to Islamabad, Pakistan, for talks with Iran, although Tehran has denied there are plans for a second round of negotiations.
Trump once again threatened to knock out every single power plant and bridge in Iran if the country refuses to make a deal.
The latest threats combined with news that U.S. forces have seized an Iranian-flagged cargo ship in the Gulf of Oman, contributed to a significant rebound by the price of crude oil.
Some traders may also have been looking to cash in on last week’s strong gains, although selling pressure remained relatively subdued amid persistent optimism about an eventual U.S.-Iran deal.
Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.
Airline stocks saw considerable weakness, however, with the NYSE Arca Airline Index falling by 1.8 percent after soaring by 6.4 percent last Friday.
A pullback by the price of gold also weighed on gold stocks, dragging the NYSE Arca Gold Bugs Index down by 1.3 percent.
Pharmaceutical and health care stocks also saw notable weakness on the day, while steel and banking stocks moved to the upside.