U.S. stock index futures pointed modestly lower on Tuesday, signaling a cautious start to trading as investors reassessed the outlook following two sessions of solid gains.
Futures slipped after fresh data from the Commerce Department showed that U.S. retail sales unexpectedly stalled in December, raising concerns about the strength of consumer spending heading into the new year.
The report showed retail sales were essentially unchanged last month, following a 0.6% increase in November. Economists had been expecting a 0.4% rise. Even after excluding autos — where sales at motor vehicle and parts dealers edged slightly lower — sales remained flat, compared with a 0.4% gain the prior month. Ex-auto sales had been forecast to rise 0.3%.
Meanwhile, separate figures from the Labor Department indicated that U.S. import prices rose marginally in December, matching market expectations.
Wall Street closed mostly higher on Monday, extending the rally that began late last week. The Dow Jones Industrial Average inched to a fresh record close, while technology shares powered a stronger advance in the Nasdaq.
By the close, all three major indexes finished in positive territory. The Dow added 20.20 points, less than 0.1%, to end at 50,135.87. The Nasdaq jumped 207.46 points, or 0.9%, to 23,238.67, while the S&P 500 rose 32.52 points, or 0.5%, to 6,964.82.
Much of the momentum came from a continued rebound in technology stocks, building on Friday’s surge. Software shares were among the leaders, with Oracle (NYSE:ORCL) soaring 9.6% after D.A. Davidson upgraded the stock to Buy from Neutral.
Despite the recent strength, investors appeared hesitant to make aggressive bets ahead of several high-impact U.S. economic releases scheduled for the days ahead. Particular focus is expected on the Labor Department’s monthly employment report, which was postponed last week due to a brief government shutdown.
The jobs report is forecast to show payrolls rising by 70,000 in January, following a 50,000 increase in December, while the unemployment rate is expected to remain unchanged at 4.4%.
Upcoming reports on retail sales and consumer price inflation are also set 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 posted some of the strongest gains in the market on Monday, helped by a sharp rise in bullion prices that lifted the NYSE Arca Gold Bugs Index by 6.1%.
Networking and software stocks also rallied strongly, with the NYSE Arca Networking Index climbing 4% and the Dow Jones U.S. Software Index advancing 3.3%. Brokerage and semiconductor stocks also performed well, while healthcare and airline shares moved lower.
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