US open: Stocks struggle for direction as Wall Street takes a breather from rally

Shortly before 1500 BST, the Dow Jones Industrial Average was up 40 points, while the S&P 500 and the Nasdaq were one 13 and points lower respectively.

Wall Street rallied on Monday, with the S&P 500 rising for a fifth consecutive session, as a series of economic reports appeared to take a hike in interest rates off the table for this year.

Earnings season on the way

In company news, the third quarter earnings season gets unofficially underway when Alcoa reports after the closing bell on Thursday.

Pepsi rose 1.87% after the soft drinks giant posted better-than-expected earnings per share ahead of the bell, even though its third-quarter revenue fell 5% and its net income slumped 73%.

Chemical group Dupont surged 4.10% after announcing late on Monday that its long-standing chief executive Ellen Kullman will retire on 16 October.

Apple and Facebook declined 0.52% and 0.64% respectively, after the European Union’s top court suspended a 15-year-old agreement that allowed technology firms to move customer data to the US from Europe.

On the economic data front, according to figures published by the Commerce Department, the US trade deficit jumped 16% month-on-month to $48.3bn in August, higher than the $47.1bn analysts had expected.

"Net trade will remain a drag on the real economy until well into next year. for the third quarter specifically, we estimate that real exports contracted very slightly, while real imports expanded by close to 4% annualised," said Steve Murphy, US economist at Capital Economics.

Still to come, San Francisco Federal Reserve president John Williams, a voting member of the Federal Open Market Committee, will give a speech on the economic outlook in San Francisco at 2230 BST.

Elsewhere, Asian stocks rallied, boosted by news that the Bank of Japan might further loosen its monetary policy this week, while European stocks moved in tight ranges amid a mixed bag of economic data.

The dollar was broadly flat against the yen and climbed 0.16% and 0.18% against the pound and the euro respectively, while gold futures rose 0.99% to $1,147.05.

Oil prices climbed, with West Texas Intermediate gaining 0.79% to $46.63 a barrel, while Brent crude rose 1.36% to $49.93 a barrel.