US pre-open: 'Santa Rally' not forthcoming ahead of GDP data

A much-fabled Santa Rally was failing to materialise ahead of the US open on Tuesday, as looming economic data caused stock futures to edge lower.

The Dow Jones Industrial Average was set to lose 42 points on open, while the S&P 500 was expected to drop 4 points and the Nasdaq was tipped to lose 15 points.

The third release of third quarter gross domestic product was due at 1430 GMT. Economists were largely looking for a downward revision from the previous 2.1% growth figure, with DailyFX's published forecast sitting at 1.9%.

November's existing home sales figures were also due out at 1500 GMT, with forecasts picking an annual figure reduced from October's 5.36m to something closer to 5.3m.

"US markets may have a battle on their hands to keep hold of yesterday's Santa-inspired gains", said Spreadex financial analyst Connor Campbell in a note.

Markets did manage a late rally to close higher on Monday, but some uncertainties remained, tainting the prospect of a holiday-inspired short week of gains. The S&P 500 closed up 0.8%, and the Dow Jones Industrial Average was up 0.7%, or 123 points. The Nasdaq Composite was up 0.9%.

Volatility was a theme among analysts after Monday's surprise surge, though, with the markets becoming somewhat quieter and investors preparing for a day-and-a-half off at the end of the week.

"If yesterday acted as a warning sign, today appears to be providing confirmation that unpredictability, inconsistency and choppiness will likely dominate the festive period amid lower volumes", IG market analyst Josh Mahoney said in a note.

One possible highlight of the day was an automotive and technology team-up, with a report in Tuesday morning's USA Today newspaper suggesting Google and Ford Motor Company could be teaming up to take the internet company's much-anticipated self driving car programme to production.

Google was up half a percent, and Ford down half a percent, in pre-open trading.

Asia was a story of a strong China and a weak Japan on Tuesday. The Japanese economics minister warned the country to prepare for lower-than-expected consumer inflation next year, as the Nikkei closed down.

Mega-brewer Kirin warned the market that its projected JPY 58bn profit was now looking more like a JPY 56bn loss, and when coupled with another day of big slides for Toshiba Corporation, dragged the markets down.

China was firing on all cylinders, however, as the end-of-year buying spree led by domestic insurers continued. Anbang Insurance Group bit into two domestic department store operators, taking its total investments so far in December to seven.

Oil was saved from another day of declines in Asia, with Brent recovering slightly to $36.52 per barrel.

The US dollar weakened slightly against the major traders. It was down 0.29% against the euro, but did make up for earlier losses against the pound to be up 0.09%.