US open: Stocks mixed early as oil prices surge

US stocks were mixed on Tuesday morning with the Dow continuing its recent sell-off as investors turned cautious amid rising concerns about inflation, with oil prices jumping more than 2%.

The Dow was down 0.3% by 1002 EDT, following a 2.3% decline last week as it continued to pull back after settling above the 40,000 mark for the first time on 17 May. The S&P 500 opened broadly flat, while the Nasdaq gained 0.2%.

WTI crude was up 2.1% at $79.32 a barrel early on Tuesday. While significantly lower than the $86-87 level seen in late-April, prices were rebounding on the back of rising tensions inn the Middle East.

"Israel’s bombing of Rafah, the killing of an Egyptian soldier and ongoing attacks on shipping routes by Houthi rebels mean that the situation remains incredibly precarious, keeping oil prices vulnerable to upside shocks," said analyst James Harte of TickMill Group.

Harte added that a weaker dollar was also boosting the demand for crude ahead of a key reading of US inflation due on Friday – the personal consumption expenditures index.

"Traders [are] wary of an uptick in easing expectations should the data show any fresh weakness in inflationary pressure. Of course, if the data comes in above forecasts, this will see a stark drop in near-term easing expectations, sending USD higher and weighing on crude," he said.

Tuesday's economic data schedule was relatively light. The S&P/Case-Shiller home price index showed price growth accelerated from 7.3% to 7.4% in March – the largest increase since October 2022. Meanwhile, the Conference Board's national consumer confidence index rose for the first time in four months in April, from 68.8 to 74.6, though still remained below the long-term average.

Speeches from a number of Federal Reserve policymakers will be closely watched, with Minneapolis Fed president Neel Kashkari, San Francisco Fed president Mary Daly and Fed governor Lisa Cook all scheduled to talk. Up first was Kashkari, who said in an interview with CNBC that the Fed is looking for "many months" of positive inflation data before it considers cutting interest rates.

Market movers

Nvidia shares were rising 5%, adding to recent gains after the chipmaker smashed forecasts with its quarterly results last week. The stock has now jumped by 34% since the start of May, and by 132% over the year to date.

Meme stock GameStop jumped 13% after the video-game retailer completed a $933m equity offering, which it intends to use for "general corporate purposes". The share sale was first proposed two weeks ago.

Broker comments were moving many stocks in morning trade: Norwegian surged after Mizuho lifted the cruise operator from 'neutral' to 'buy'; rental platform Airbnb was helped by a Wedbush upgrade to 'outperform'; while chemicals giant DuPont was raised from 'neutral' to 'buy' by Citi.