Market Snapshot: U.S. stock futures struggle for direction in early trade

What’s driving markets

Markets displayed a cautious tone early Tuesday after Wall Street’s latest advance to fresh highs for the year faltered late in the Monday session.

“After popping through 4300, briefly taking it into the technical bull-market territory, the S&P 500 rally train was slightly derailed when U.S. stocks turned lower after a weaker-than-expected ISM services sector survey and slightly uncertain investor take of a much-anticipated product launch from tech giant Apple,” said Stephen Innes, managing partner at SPI Asset Management.

Apple’s shares
AAPL,
-0.76%
on Monday hit a record intraday high near $185 before finishing lower on the day at below $180 after the contents of its Worldwide Developers’ Conference could not match the hype.

With Apple’s shares commanding a 7.5% weighting in the S&P 500 index, the reversal left Wall Street’s benchmark just below its best levels since last August. Apple’s stock is showing another 0.5% dip in Tuesday’s premarket action.

Read also: Here’s the red flag that says a tech stock selloff could arrive soon, according to Citi

There’s a dearth of fresh catalysts for traders to feed off on Tuesday, with no economic data or company results of note due for publication during the session, and no Federal Reserve speakers ahead of the central bank’s policy meeting starting next Tuesday.

Still, investors appear relaxed about the prospects for Fed policy, with the chances of no interest rate rise next week priced at around 75%, according to the CME FedWatch Tool.

Given that rate hikes have tended to hit investor confidence over the past year, the idea of a pause may help explain why the CBOE Vix index, an option-based gauge of expected S&P 500 volatility, sits at 14.72, notably below its long-run average of 20 and flirting with its lowest levels in three years.

But there was a reminder from Australia that central banks can still spring monetary surprises. The Reserve Bank of Australia on Tuesday delivered its second unexpected 25 basis point rate hike in a row, taking its main borrowing costs to 4.1% and triggering a jump in the Aussie dollar and a slide in bonds and stocks.

Companies in focus

• Apple Inc.
  AAPL,
  -0.76%
  was slightly lower in premarket trading Tuesday, off 0.5%. This is after being downgraded to neutral by analysts at D.A. Davidson, who reduced their price target to $185 from $193 per share after slipping from all time highs Monday following the tech giant’s launch of its Vision Pro headset.

• GitLab Inc.
  GTLB,
  +4.95%
  shares surged 29% in premarket trading, following an earnings report that beat expectations and played up the software company’s efforts in artificial intelligence.