US Stocks Likely To Open Lower: Expert Highlights Technical Analysis Showing S&P 500's 'Recovery Is Real' And Not A 'Bull Trap' Or 'Bear Market Rally'

U.S. stock futures fell on Tuesday, pulling back after a higher close on Monday. Futures of major benchmark indices declined in premarket.

Trade tensions escalated as China’s Commerce Ministry dismissed President Donald Trump‘s allegations that Beijing had violated the Geneva trade agreement. The ministry asserted that China had fully implemented and consistently honored the deal struck last month in Geneva.

The Chinese government declared that the U.S. had “groundlessly” accused China of breaching the trade agreement. It pledged to take strong action to protect its interests.

Meanwhile, the 10-year Treasury bond yielded 4.41% and the two-year bond was at 3.92%. The CME Group's FedWatch tool‘s projections show markets pricing a 95.3% likelihood of the Federal Reserve keeping the current interest rates unchanged in its June meeting.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Tuesday. The SPY was down 0.45% at $590.04, while the QQQ declined 0.36% to $521.35, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks wrapped up Monday higher. Most sectors within the S&P 500 ended positively, spearheaded by strong performances in energy, communication services, and information technology stocks. However, industrial stocks went against the grain, finishing the session lower.

Wall Street closed out last month strong, with the S&P 500 up more than 6.2% in May and the Nasdaq surging 9.6%. Both indices had their best months since November 2023, while the Dow gained 3.9% for the month.

Trade tensions flared as President Trump announced weekend plans to double tariffs on steel and aluminum imports to 50% starting June 4.

In corporate news, Campbell’s Co. CPB reported better-than-expected third-quarter results. Meanwhile, Lyra Therapeutics Inc. LYRA shares skyrocketed over 310% on Monday after its ENLIGHTEN 2 Phase 3 trial of LYR-210 met its primary endpoint.

On the economic front, the ISM manufacturing PMI dropped to 48.5 in May from April’s 48.7, missing market estimates of 49.5. U.S. construction spending also fell, declining 0.4% month-over-month in April to an annual rate of $2,152.4 billion, following a revised 0.8% drop in March.

The Dow Jones index ended 35 points or 0.084% higher at 42,305.48, whereas the S&P 500 index rose 0.41% to 5,935.94. Nasdaq Composite advanced 0.67% to 19,242.61, and the small-cap gauge, Russell 2000, gained 0.19% to end at 2,070.16.

Insights From Analysts:

As the S&P 500 index rebounded from its April slump, Adam Turnquist, LPL Financial's chief technical strategist, pointed to strong indicators of a genuine recovery, noting the index’s reversal of its short-term downtrend and a doubling of its uptrend during this period.

A chart from LPL Financial illustrates this shift: on April 8, the S&P 500’s uptrend accounted for just 29.4%, with downtrends at 70.2%. By May 29, however, the index had swiftly recovered, with uptrends doubling to 60% and downtrends decreasing to 39%.

LPL Financial attributed this change to significant technical progress throughout May. He explained, "The index has reversed a short-term downtrend and continues to hold above its recent price gap above the 200-day moving average (dma)."

Turnquist suggests that a close above the May high of 5,969 points could pave the way for the index to retest its previous high of 6,144 points.

He emphasized, "There is a growing list of technical evidence that suggests this recovery is real, and not a ‘bull trap' or ‘bear market rally.' For investors, this means dips above support should be used as buying opportunities."

This positive outlook follows a strong May for the broader market, which saw a 6.2% gain—its best month since November 2023 and its strongest May since 1990. Turnquist also noted that historically, when the index rallies 3% or more in May, a month often associated with the “Sell in May and Go Away” adage, year-end returns average 8.9%, with positive returns in 73% of such periods.

Meanwhile, the Senior Economist at WisdomTree and former professor at the University of Pennsylvania, Jeremy Siegel, said, “I remain bullish on equities presuming tariffs remain in the 10% for all, 30% for China, range.”

Highlighting that Trump has doubled the tariffs on steel and aluminum, Seigel added, “If he goes no further, the current upward trend can continue. The market's resilience, despite noise on tariffs, inflation, and politics, tells me that investors see the same economy I do: strong productivity, solid consumer spending, and stabilizing inflation.”

See Also: How to Trade Futures

Upcoming Economic Data

Here’s what investors will keep an eye on Tuesday:

• April’s factory orders and job openings data will be out by 10:00 a.m. ET.
• Chicago Fed President Austan Goolsbee will speak at 12:45 p.m., Federal Reserve Governor Lisa Cook will speak at 1:00 p.m., and Dallas Fed President Lorie Logan will speak at 3:30 p.m. ET.

Stocks In Focus:

• Dollar General Corp. DG rose 1.37% in premarket on Tuesday as analysts expect it to report quarterly earnings of $1.48 per share on revenue of $10.31 billion, before the opening bell.
• Signet Jewelers Ltd. SIG was up 1.80% ahead of its earnings, which are supposed to be released before the opening bell. Analysts expect earnings of $1.03 per share on revenue of $1.52 billion.
• Ferguson Enterprises Inc. FERG declined 0.99% as analysts expect it to report quarterly earnings of $2.02 per share on revenue of $7.42 billion, before the opening bell.
• Credo Technology Group Holding Ltd. CRDO jumped 12.8% after reporting fourth-quarter revenue of $170.03 million, beating analyst estimates of $162.96 million.
• MoonLake Immunotherapeutics MLTX surged 19.05% following reports that Merck held talks to acquire the Swiss biotech company for over $3 billion.
• Donaldson Company Inc. DCI fell 0.39% ahead of its earnings, which are supposed to be released before the opening bell. Analysts expect earnings of 95 cents per share on revenue of $933.45 million.
• Ollie’s Bargain Outlet Holdings Inc. OLLI edged 0.45% higher as analysts expect it to report quarterly earnings of 71 cents per share on revenue of $565.75 million, before the opening bell.
• Rocket Lab USA Inc. RKLB was trading 0.90% higher after the successful launch of the 10th Electron mission for multi-launch customer BlackSky.

Commodities, Gold, And Global Equity Markets:

Crude oil futures were trading higher in the early New York session by 0.34% to hover around $62.73 per barrel.

Gold Spot US Dollar fell 0.58% to hover around $3,361.51 per ounce. Its last record high stood at $3,500.33 per ounce. The U.S. Dollar Index spot was higher by 0.21% at the 98.9110 level.

Asian markets closed mixed on Tuesday as India's S&P BSE Sensex, Japan's Nikkei 225 indices declined. While South Korea's Kospi, Australia's ASX 200, China’s CSI 300, and Hong Kong's Hang Seng indices rose. European markets were lower in early trade.

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