US stocks struggle to build on overnight strong gains

Major US equity indices built on overnight strong up-move and opened with modest gains on Tuesday, albeit quickly drifted into negative territory.

Trade tensions between the US and China showed further signs of easing after the Chinese government announced to cut import duties on passenger cars to 15% from the current 25% effective from July 1. Meanwhile, both the countries are also reportedly nearing an agreement to settle the controversy over Chinese telecom giant ZTE. 

Adding to this, some renewed buying around tech-stocks lifted the overall market sentiment and was seen supporting a mildly positive sentiment during the opening hour of trade.

Bulls, however, lacked strong conviction amid a continuous upsurge in crude oil prices, which now seemed to fuel inflationary concerns. This coupled with elevated US Treasury bond yields, amid expectations over a faster Fed monetary policy tightening cycle, might further contribute towards capping any additional gains. 

At the time of writing this report, the Dow Jones Industrial Average was down around 35-points and retreated back below the 25K psychologically important level. Meanwhile, the broader S&P 500 Index and tech-heavy Nasdaq Composite Index both held just above previous session’s closing levels, around 2,735 and 7,396 respectively.