Following the sharp pullback seen in the previous session, stocks may see further downside in early trading on Tuesday. The major index futures are currently pointing to a modestly lower open for the markets, with the Dow futures down by 37 points.
Concerns about the impact of new restrictions imposed in response to surging coronavirus cases and new strains of the virus may weigh on Wall Street.
The U.K. is set to return to a national lockdown amid concerns about a more contagious variant of Covid-19, with Prime Minister Boris Johnson warning the coming weeks would be the “hardest yet.”
Japan is also considering declaring a state of emergency in the greater Tokyo area, while Germany is considering extending lockdown measures beyond January 10th.
Trading activity may be somewhat subdued, however, as traders await the results of two key Senate runoffs in Georgia.
The outcome of the runoff elections will determine which party controls the Senate and could have a major impact on what President-elect Joe Biden is able to accomplish.
Traders are also likely to keep an eye on developments in Washington, as a number of Republican lawmakers plan to oppose certifying the presidential election results on Wednesday.
President Donald Trump has repeatedly claimed Biden’s victory is illegitimate because of widespread vote fraud and declared during a rally in Georgia on Monday that Democrats are “not taking this White House.”
Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of December.
The ISM’s manufacturing PMI is expected to edge down to 56.6 in December from 57.5 in November, although a reading above 50 would still indicate growth.
After failing to sustain an initial move to the upside, stocks moved sharply lower over the course of the first trading day of the New Year on Monday. With the pullback, the major averages partly offset the strong gains posted during a turbulent 2020.
The major averages climbed well off their worst levels in afternoon trading but remained firmly negative. The Dow slumped 382.59 points or 1.3 percent to 30,223.89, the Nasdaq plunged 189.84 points or 1.5 percent to 12,698.45 and the S&P 500 tumbled 55.42 points or 1.5 percent to 3,700.65.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index advanced by 0.7 percent.
Meanwhile, European stocks have moved mostly lower on the day. The German DAX Index and the French CAC 40 Index are both down by 0.8 percent, although the U.K.’s FTSE 100 Index is just above the unchanged line.
In commodities trading, crude oil futures are climbing $0.64 to $48.26 a barrel after sliding $0.90 to $47.62 a barrel on Monday. Meanwhile, after skyrocketing $51.50 to $1,946.60 an ounce in the previous session, gold futures are rising $5.60 to $1,952.20 an ounce.
On the currency front, the U.S. dollar is trading at 102.91 yen compared to the 103.13 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2264 compared to yesterday’s $1.2248.
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