Stocks May Benefit From Bargain Hunting After Sell-Off - U.S. Commentary

(RTTNews) - Stocks are likely to move to the upside in early trading on Tuesday after ending the previous session substantially lower. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 80 points.

Bargain hunting is likely to contribute to any early strength on Wall Street following the sell-off seen on Monday, which extended a recent downward trend for the markets.

With the steep losses on the day, the Dow and the S&P 500 fell to their lowest levels in over three months, while the Nasdaq set a two-month closing low.

The Dow has dropped by 7.3 percent compared to the record closing high set on the last day of 2013, closing in on the 10 percent decrease that defines a correction.

While some traders may look to pick up stocks at reduced levels following the recent pullback, continued weakness in emerging market assets may keep buying interest somewhat subdued.

Trading could also be impacted by the release of the Commerce Department's report on factory orders in the month of December.

The report, which is due to be released a half-hour after the start of trading, is expected to show a 1.8 percent drop in factory orders in December following a 1.8 percent increase in November.

The factory orders report does not typically attract much attention but may be in focus today in light of yesterday's much weaker than expected reading on manufacturing activity in January.

Among individual stocks, shares of ATMI (ATMI) are moving sharply higher in pre-market trading after the semiconductor materials supplier agreed to be acquired by Entegris (ENTG) in a deal valued at approximately $1.15 billion.

Fast food giant Yum! Brands (YUM) could also see early strength after reporting better than expected fourth quarter earnings. The company also reaffirmed its 2014 earnings growth guidance.

On the other hand, shares of Take-Two Interactive (TTWO) may come under pressure after the video game company reported better than expected third quarter results but provided disappointing fourth quarter guidance.

Extending the downward trend seen over the past two weeks, stocks moved sharply lower during trading on Monday. A disappointing reading on manufacturing activity contributed to the broad based weakness on Wall Street.

The major averages remained firmly negative going into the close, ending the session near their worst levels of the day. The Dow plummeted 326.05 points or 2.1 percent to 15,372.80, the Nasdaq dove 106.92 points or 2.6 percent to 3,996.96 and the S&P 500 plunged 40.70 points or 2.3 percent to 1,741.89.