U.S. Stocks May Continue To Regain Ground In Early Trading

Following the rally seen in the previous session, stocks may see further upside in early trading on Tuesday. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.2 percent.

Bargain hunting may contribute to continued strength on Wall Street, as stocks remain at relatively reduced levels even after yesterday’s rebound.

However, traders may be reluctant to make significant moves as they continue to look ahead to tomorrow’s Federal Reserve announcement.

While the Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

CME Group’s FedWatch Tool is currently indicating a 98.2 percent chance the Fed will leave rates unchanged on Wednesday and a 74.3 percent chance rates will remain unchanged next month.

A steep drop by shares of Caterpillar (CAT) may also limit any upside for the Dow, with the equipment maker slumping by 5.9 percent in pre-market trading after reporting better than expected third quarter earnings but providing disappointing fourth quarter revenue guidance.

Just after the start of trading, MNI Indicators is due to release its report on Chicago-area business activity in the month of October.

The Chicago business barometer is expected to inch up to 45.0 in October from 44.1 in September, although a reading below 50 would still indicate a contraction.

The Conference Board is also scheduled to release its report on consumer confidence in the month of October. The consumer confidence index is expected to dip to 100.0 in October after tumbling to 103.0 in September.

Stocks moved sharply higher over the course of the trading session on Monday, partly offsetting the steep losses posted last week. The major averages all showed significant moves to the upside following the mixed performance seen last Friday.

The major averages pulled back off their highs going into the close but held on to strong gains. The Dow spiked 511.37 points or 1.6 percent to 32,928.96, the Nasdaq jumped 146.47 points or 1.2 percent to 12,789.48 and the S&P 500 surged 49.45 points or 1.2 percent to 4,166.82.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index climbed by 0.5 percent, while Hong Kong’s Hang Seng Index tumbled by 1.7 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has jumped by 1.1 percent, the German DAX Index is up by 0.7 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

In commodities trading, crude oil futures are climbing $0.37 to$82.68 a barrel after soaring $3.23 to $82.31 on Monday. Meanwhile, after rising $7.10 to $2,005.60 an ounce in the previous session, gold futures are inching up $4.20 to $2,009.80 an ounce.

On the currency front, the U.S. dollar is trading at 150.82 yen compared to the 149.10 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0629 compared to yesterday’s $1.0615.

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