U.S. Stocks May See Initial Weakness On Disappointing Retail Sales Data

After turning mixed over the course of the previous session, stocks are likely to come under pressure in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 154 points.

Early selling pressure may be generated in reaction to a report from the Commerce Department showing U.S. retail sales tumbled by much more than expected in the month of July.

The report said retail sales slumped by 1.1 percent in July after climbing by an upwardly revised 0.7 percent in June.

Economists had expected retail sales to dip by 0.3 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding a steep drop in sales by motor vehicles and parts dealers, retail sales fell by 0.4 percent in July after jumping by 1.6 percent in June. Ex-auto sales were expected to inch up by 0.1 percent.

A drop by shares of Home Depot (HD) may also weigh on the markets, with the home improvement retailer moving lower in pre-market trading after reporting second quarter earnings that beat estimates but weaker than expected same-store sales growth.

Retail giant Wal-Mart (WMT) is also seeing pre-market weakness despite reporting better than expected second quarter results and raising its full-year guidance.

Just before the start of trading, the Federal Reserve is scheduled to release its report on industrial production in the month of July. Industrial production is expected to rise by 0.4 percent in July, matching the increase in June.

Reports on homebuilder confidence and business inventories are also due to be released shortly after the start of trading, while Fed Chair Jerome Powell will host a town hall with educators and students later in the day.

After coming under pressure early in the session, the major U.S. stock indexes turned mixed over the course of the trading day on Monday. The Dow and the S&P 500 recovered to end the day at new record closing highs, while the Nasdaq regained ground but still closed in the red.

While the tech-heavy Nasdaq dipped 29.14 points or 0.2 percent to 14,793.76, the Dow climbed 110.02 points or 0.3 percent to 35,625.40 and the S&P 500 rose 11.71 points or 0.3 percent to 4,479.71.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index plunged by 2 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.1 percent, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is down by 0.4 percent.

In commodities trading, crude oil futures are slipping $0.35 to $66.96 a barrel after slumping $1.15 to $67.29 a barrel on Monday. Meanwhile, after climbing $11.60 to $1,789.80 an ounce in the previous session, gold futures are rising $2.50 to $1,792.30 an ounce.

On the currency front, the U.S. dollar is trading at 109.50 yen compared to the 109.24 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1741 compared to yesterday’s $1.1778.

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