Market Analysis

The major U.S. index futures are pointing to a higher opening on Tuesday, although trading activity may be subdued ahead of monetary policy decisions by the Bank of Japan and the U.S. Federal Reserve. A report showing a steep drop in new residential construction may ease concerns about the possibility a near-term interact rate hike by the Fed.

U.S. stocks ended lower on Monday, as interest rate concerns amid the release of a strong housing market reading squeezed the early momentum witnessed by the markets.

The averages opened higher and saw a short spike but declined steadily following the release of the housing data. After grazing the unchanged line in late afternoon trading, the indexes moved roughly sideways before pulling back into negative territory going into the close.

The Dow Industrials ended down 3.63 points or 0.02 percent at 18,120, the S&P 500 Index closed 0.04 points lower at 2,139 and the Nasdaq Composite ended at 5,235, down 9.54 points or 0.18 percent.

The breadth among the Dow components was even, with 15 stocks receding, while the remaining 15 stocks ended higher. Wal-Mart (WMT), Apple (AAPL), Verizon (VZ), Intel (INTC) and Merck (MRK) were among the biggest decliners of the session.

Among the sectors, steel and utility stocks gained ground, while most of the other major sectors ended the day showing only modest moves.

On the economic front, the National Association of Home Builders reported that homebuilder confidence improved notably in September. The housing market index rose to 65 from a downwardly revised reading of 59 for August. The present sales condition index rose 6 points to 7, representing a nearly 1-year high, the index measuring prospective buyer traffic was up 4 points to 48 and the sales expectations index gained 5 points to 71.

Currency, Commodity Markets

Crude oil futures for October delivery are sliding $0.53 to $42.77 a barrel after ending Monday's session up $0.27 at $43.30 a barrel. The most actively traded November futures are down $0.56 at $43.30 a barrel. Meanwhile, an ounce of gold is currently trading at $1,317.20, down $0.60 from the previous session’s close of $1,317.80. On Monday, gold rose $8.90.

On the currency front, the U.S. dollar is trading at 101.84 yen compared to the 101.93 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1180 compared to yesterday’s $1.1175.

Asia

The Asian markets closed mixed, as risk aversion once again reared its head ahead of two major global central bank decisions. Crude oil was also lower in Asian session. The Chinese, Hong Kong, Indian, Indonesian and Japanese markets closed lower, while the rest of the markets advanced.

The Japanese market ended lower as the yen stabilized at the upper 101-yen level against the dollar. The Nikkei 225 Index opened lower but managed to snap its losses and move into positive territory by late morning trading. After hovering in the green until late afternoon trading, the index pulled back and ended down 27.14 points or 0.16 percent at 16,492.

Food, textile, pharma, retail, brokerage, insurance, real estate and most export stocks came under selling pressure. On the other hand, housing, chemical, banking, utility and paper stocks advanced. Mining stocks ended mixed

Australia’s All Ordinaries Index opened higher but quickly reversed and fell below the flat line. After being in the red for the better part of the session, the index recovered going into the close to end up 3.60 points or 0.07 percent at 5,397.

Most sectors advanced, led by IT, material and utility stocks. However, energy and telecom stocks pulled back sharply.

However, Hong Kong’s Hang Seng Index lost 19.59 points or 0.08 percent before ending at 23,531, and China’s Shanghai Composite Index closed at 3,023, down 3.05 points or 0.10 percent.

The minutes of the Reserve Bank of Australia’s September monetary policy meeting hinted at stability in interest rates, as historically low rates help the economy shrug off weakness in investment in resources.

Data released by the Australian Bureau of Statistics showed that house prices in Australia rose 2 percent sequentially in the second quarter following a 0.2 percent drop in the first quarter. Economists expected a sharper 3 percent increase. Annually, house prices rose a less than expected 3 percent.

Europe

European stocks are higher for the second straight session. After opening on a lackluster note, the major averages in Europe have managed to grind higher and are currently seeing notable strength.

In major corporate news, U.K. home improvement retailer Kingfisher reported higher adjusted pre-tax profits, as sales grew. However, the company cautioned of softness in France in the near term.

GlaxoSmithKline (GSK) announced that Emma Walmsley, currently the CEO of the company's Consumer Healthcare division, was appointed CEO Designate and will succeed Andrew Witty when he retires on March 31, 2017.

On the economic front, data released by the German Federal Statistical Office showed that producer prices in German fell 1.6 percent year-over-year in August, slower than the 2 percent drop in July. Wholesale prices have been on the wane since August 2013. Excluding energy prices, producer prices were down 0.3 percent.

U.S. Economic Reports

The two-day FOMC meeting gets underway later today, although the decision is not expected until Wednesday.

New residential construction in the U.S. pulled back by much more than expected in the month of August, the Commerce Department revealed in a report on Tuesday.

The report said housing starts tumbled by 5.8 percent to an annual rate of 1.142 million in August from the revised July estimate of 1.212 million.

Economists had expected housing starts to drop by 1.7 percent to a rate of 1.190 million from the 1.211 million that had been reported for the previous month.



The Commerce Department also said building permits, an indicator of future housing demand, dipped by 0.4 percent to a rate of 1.139 million in August from a revised 1.144 million in July.

The decrease surprised economists, who had expected building permits to climb by 1.3 percent to a rate of 1.167 million in August from the 1.152 million originally reported for the previous month.

Stocks in Focus

Homebuilder Lennar (LEN) reported third quarter earnings and revenues that rose more than expected amid a notable increase in home deliveries.

Forward Air (FWRD) lowered its third quarter revenue growth guidance range to -2% to 2% from 1-5% and reduced its adjusted income per share guidance to 48-52 cents per share from 61-65 cents per share. The predicament was blamed on lower freight volumes.

Reacting to the schedule 13D filed by Alden Golden Capital, Pier 1 Imports (PIR) said it would continue to engage with its shareholders and evaluate opportunities to increase long-term shareholder value.

Steel Dynamics (STLD) pre-announced that it expects third quarter earnings per share of 63-67 cents per share, up from 25 cents per share in the year-ago period. The company said it would benefit from meaningful metal spread expansion and a higher rate of growth in realized steel product pricing than in the additional costs for higher prices ferrous scrap utilized.

Intel (INTC) announced the appointment of Robert Swan as its CFO, effective October 10, 2016, replacing Stacy Smith, who is taking a broader role within the company’s manufacturing, sales and operations.

Rambus (RMBS) announced the appointment of Cypress Semiconductor (CY) executive Rahul Mathur as its CFO.

Autodesk (ADSK) announced a plan to repurchase of up to 30 million of its shares.

Adobe Systems (ADBE), FedEx (FDX) and KB Home (KBH) are among the companies due to release their quarterly results after the close of trading.