US pre-open: Stocks seen lower as investors eye Powell testimony
US stocks looked set for a weaker open on Tuesday as optimism over Sino-US trade relations faded and investors eyed Federal Reserve chairman Jerome Powell's testimony before the US Senate.
At 1210 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.4% and 0.2%, respectively, while Nasdaq futures were 0.3% lower.
James Hughes, chief market analyst at AxiTrader, said: "US futures have been flip-flopping through the Asian session as sentiment continues to cool over the outcome of the trade talks with China. The US is angling for fresh restrictions which will again add weight to the idea that Beijing will come out on top here, although even the Shanghai index has been muted after Monday’s bumper rally.
"There’s a whole slew of economic data due from the US today although the high point is likely to be Jerome Powell’s testimony to lawmakers in Washington, which could hold important clues over the outlook for US monetary policy for the remainder of the year. Markets are currently pricing in one rate cut towards the end of 2019 and it seems unlikely that any more than that should be necessary for now, given the proposed termination of quantitative tightening that’s also been mooted.
"Consumer confidence data due after the opening bell could also provide some respite for stocks, with this number tipped to show a reasonable uptick. Ultimately however its international trade that’s likely to garner the most credence for now, so any further details of the narrative between Washington and Beijing will be closely followed."
Powell's testimony is due at 1445 GMT. On the data front, housing starts and building permits are at 1330 GMT while the S&P/Case-Shiller home price index is at 1400 GMT and consumer confidence is at 1500 GMT.
In corporate news, shares in electric car maker Tesla were likely to be under pressure after the Securities and Exchange Commission asked a federal judge to hold chief executive Elon Musk in contempt over a tweet he made last week.
On 19 February, Musk tweeted: "Tesla made 0 cars in 2011, but will make around 500k in 2019. Just a few hours later, however, he tweeted again: "Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k."
RBC Capital Markets said: "The fact that he issued a follow-up, correcting tweet (written with Tesla's securities counsel, which itself implies that counsel may have thought the first tweet inaccurate or problematic) may take the harshest potential outcome off the table. We do not know how long this legal episode could last, but we think it’s likely to be an overhang on the stock."
Elsewhere, Home Depot was down 2.6% in pre-market trade as the retailer's fourth-quarter earnings and sales fell short of analysts' expectations.
Still to come, earnings are due from Macy's.