U.S. Stocks May See Further Upside Following Yesterday's Rally

(RTTNews) - The major U.S. index futures are currently pointing to a modestly higher open on Tuesday, with stocks likely to see further upside following yesterday's rally.

The markets may continue to benefit from recent upward momentum, which propelled the major averages to new record highs on Monday amid optimism about a potential trade deal between the U.S. and China.

News of a rare metals deal between the U.S. and Japan may increase confidence ahead of President Donald Trump's meeting with his Chinese counterpart Xi Jinping later this week.

Buying interest may be somewhat subdued, however, as traders look ahead to the Federal Reserve's monetary policy announcement on Wednesday.

While the Fed is widely expected to lower interest rates by another quarter point, traders will be looking to the accompanying statement as well as Fed Chair Jerome Powell's post-meeting comments for clues about the likelihood of further rate cuts.

CME Group's FedWatch Tool is currently indicating 94.9 percent chance the Fed will lower rates by another quarter point in December, but the views about the chances of further rate cuts in early 2026 are more mixed.

Traders are also looking ahead to the release of earnings news from a number of big-name tech companies, with Alphabet (GOOGL), Apple (AAPL), Meta Platforms (META), Microsoft (MSGFT) and Amazon (AMZN) due to report their quarterly results in the coming days.

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 added to the strong gains posted last week, reaching new record closing highs.

The major averages saw further upside going into the end of the day, reaching new highs for the session. The Nasdaq surged 432.59 points or 1.9 percent to 23,637.46, the S&P 500 jumped 83.47 points or 1.2 percent to 6,875.16 and the Dow climbed 337.47 points or 0.7 percent to 47,544.59.

The rally on Wall Street came amid optimism about a potential U.S.-China trade deal ahead of a highly anticipated meeting between President Donald Trump and his Chinese counterpart Xi Jinping later this week.

Treasury Secretary Scott Bessent met with Chinese officials in Malaysia over the weekend and said he believes the talks have resulted in a "very successful framework" for Trump and Xi to discuss on Thursday.

Bessent also indicated he expects China to resume its purchases of U.S. soybeans and delay the export controls on rare earths that contributed to the recent increase in tensions.

On his way to Japan, Trump also expressed optimism about reaching a trade deal with China after signing separate trade and mineral agreements with his Malaysian and Cambodian counterparts.

Optimism about the outlook for interest rates may also have contributed to the strength on Wall Street ahead of the Federal Reserve's monetary policy announcement.

Semiconductor stocks turned in some of the market's best performances on the day, with the Philadelphia Semiconductor Index surging by 2.7 percent to a new record closing high.

Qualcomm (QCOM) helped lead the sector higher, spiking by 11.1 percent after announcing new artificial intelligence accelerator chips to compete with Nvidia (NVDA) and Advanced Micro Devices (AMD).

Considerable strength also emerged among telecom stocks, as reflected by the 1.4 percent gain posted by the NYSE Arca North American Telecom Index.

Transportation, steel and software stocks also saw notable strength, while gold stocks moved sharply lower along with the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are slumping $0.92 to $60.39 a barrel after slipping $0.19 to $61.31 a barrel on Monday. Meanwhile, after plunging $118.10 to $4,019.70 an ounce in the previous session, gold futures are tumbling $77.70 to $3,942 an ounce.

On the currency front, the U.S. dollar is trading at 152.14 yen compared to the 152.87 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1648 compared to yesterday's $1.1643.

Asia

Asian stocks fell in cautious trading on Tuesday as investors locked in some profits after recent gains.

Amid global trade tensions, the Association of Southeast Asian Nations (ASEAN) and China today signed an upgraded version of their Free Trade Agreement (FTA) during a summit in Kuala Lumpur, Malaysia.

China's Shanghai Composite Index dipped 0.2 percent to 3,988.22 and Hong Kong's Hang Seng Index fell 0.3 percent to 26,346.14.

Ahead of talks between Donald Trump and Xi Jinping, Chinese Premier Li Qiang denounced "unilateralism" and said the world should not return to "the law of the jungle."

Trump said en route to Japan that he was hopeful of a deal when he sees Xi on Thursday.

Japanese markets slipped from record highs reached the previous day due to profit taking.

The Nikkei 225 Index settled 0.6 percent lower at 50,219.18 as Trump signed a rare metals deal with Japan's newly elected Prime Minister Sanae Takaichi. The broader Topix Index slumped 1.2 percent to 3,285.87.

Seoul stocks fell notably ahead of major events expected around the Asia-Pacific Economic Cooperation gathering this week. The Kospi closed down 0.8 percent at 4,010.41 ahead of the Korea-U.S. summit on the 29th and the U.S.-China summit on the 30th.

Semiconductor stocks succumbed to profit taking, with Samsung Electronics falling 2.5 percent and SK Hynix losing 2.6 percent.

Australian markets declined as investors awaited crucial inflation data for direction. The benchmark S&P/ASX 200 Index slid 0.5 percent to 9,012.50, dragged down by healthcare and technology stocks. The broader All Ordinaries Index closed 0.6 percent lower at 9,295.80.

CSL plummeted nearly 16 percent after revising its long-term growth outlook. WiseTech, which is undergoing investigation by ASIC and AFP, also plunged 16 percent.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index finished marginally higher at 13,402.66, led by gains in financial stocks.

Europe

European stocks are turning in a lackluster performance on Tuesday as investors look to key central bank meetings as well as a planned meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping in South Korea on Thursday for direction.

There was also some disappointment on the data front, with a measure of German consumer confidence hitting its lowest level since April amid continued geopolitical uncertainty and higher inflation.

While the U.K.'s FTSE 100 Index is up by 0.2 percent, the German DAX Index is just below the unchanged line and the French CAC 40 Index is down by 0.1 percent.

Symrise, a German supplier of fragrances and flavors, has tumbled after cutting its full-year organic growth outlook.

French lender BNP Paribas has also shown a notable move to the downside after missing third-quarter profit forecasts.

Swiss drugmaker Novartis has also come under pressure despite delivering third-quarter profit in line with expectations.

Dutch telco KPN has also moved lower after reporting modest 2 percent growth in third quarter revenues.

Meanwhile, HSBC Holdings has surged. The lender raised its profit outlook for 2025 despite reporting a 14 percent decline in third-quarter pretax profit.

Capgemini has also jumped. The IT consulting firm raised its full-year revenue guidance after reporting higher third-quarter revenue.

Amundi, Europe's biggest asset manager, has also moved to the upside after third-quarter 2025 profit before tax topped forecasts.

U.S. Economic News

Standard & Poor's is due to release its report on home prices in major metropolitan areas in the month of August at 9 am ET. The annual rate of home price growth is expected to slow to 1.6 percent in August from 1.8 percent in July.

At 10 am ET, the Conference Board is due to release its report on consumer confidence in the month of October. The consumer confidence index is expected to dip to 93.4 in October after slumping to 94.2 in September.

The Treasury Department is scheduled to announce the results of this month's auction of $44 billion worth of seven-year notes at 1 pm ET.