U.S. Stocks May Lack Direction Following Yesterday's Rally

(RTTNews) - Following the rally seen in the previous session, stocks may show a lack of direction in early trading on Tuesday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures down by less than a tenth of a percent.

Traders may take a step back to assess the recent strength in the markets, which has seen stocks move sharply higher over the past three sessions, lifting the Dow to a record closing high on Monday.

While news of a preliminary deal to end the monthslong U.S.-Iran war continues to generate positive sentiment, traders may wait for the agreement to be finalized before making more significant bets.

The Federal Reserve's upcoming monetary policy announcement may also keep some traders on the sidelines.

The Fed is widely expected to leave interest rates unchanged, but the accompanying statement and new Chair Kevin Warsh's post-meeting comments could impact the outlook for rates.

"Investors will be looking for clues about how Warsh intends to navigate an economy where inflation remains above target, growth is still resilient and AI-related investment continues to generate strong demand," said Daniela Hathorn, Senior Market Analyst at Capital.com.

She added, "The fall in oil prices gives policymakers more flexibility, but underlying inflation pressures have not disappeared."

After moving sharply higher early in the session, stocks continued to turn in a strong performance throughout the trading day on Monday. The major averages all showed significant moves to the upside, with the Dow reaching a new record closing high.

The major averages gave back ground going into the end of the day but still posted strong gains. The Nasdaq surged 795.10 points or 3.1 percent to 26,683.94, the S&P 500 jumped 122.83 points or 1.7 percent to 7,554.29 and the Dow advanced 468.77 points or 0.9 percent to 51,671.03.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index crept up by 0.1 percent, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index is up by 0.8 percent, the U.K.'s FTSE 100 Index is up by 0.6 percent and the German DAX Index is up by 0.5 percent.

In commodities trading, crude oil futures are plunging $3.81 to $76.94 a barrel after plummeting $4.13 to $80.75 a barrel on Monday. Meanwhile, after jumping $112.80 to $4,351.60 ounce in the previous session, gold futures are rising $16.70 to $4,368.30 an ounce.

On the currency front, the U.S. dollar is trading at 160.32 yen compared to the 160.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1597 compared to yesterday's $1.1590.