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Crude oil and labor market data: Here’s what could drive the market on Tuesday

The S&P 500, Dow Jones industrial average and Nasdaq composite all closed mildly lower on Monday, though they remain within striking distance of the all-time highs hit on Friday. Looking forward, here are the three things Washington Crossing Advisors portfolio manager Chad Morganlander will be watching for on Tuesday.

1. Crude oil weakness

Crude oil on Monday declined on the back of news that large crude oil exporter Saudi Arabia and other Arab states cut ties with Qatar, fueling concerns that such cutting of diplomatic relations would hinder efforts to reduce the global oil glut. Morganlander is watching for oil's movement in Tuesday trading.

"We believe oil will continue to hit lower lows because of not only global growth issues, but also the deal with OPEC. We don't believe it's going to solve the problem," Morganlander said Monday on CNBC's "Trading Nation."

The first half of the year has indeed proved challenging for oil market participants, RBC Capital Markets commodity strategist Michael Tran wrote in a Monday note to clients, due largely due to the fact that "incremental improvement to the fundamental backdrop has been slow relative to consensus expectations."

Tran expects WTI crude oil to average $53 per barrel this year before increasing to an average price of $59 per barrel next year.

Crude oil on Monday settled down nearly 1 percent, though off its session lows, at $47.35 per barrel.

2. JOLTS

The Job Openings and Labor Turnover Survey (JOLTS) is set for release Tuesday shortly after the opening bell. Morganlander is watching the report, as it is a widely used measure of labor market strength.

"We believe that it's going to prove that the economy is on firm footing, confirming that the June rate hike is in cycle," Morganlander said, adding that he believes that the Federal Reserve is going to raise its federal funds target rate two to three times over the next six months.

The upcoming report will measure openings in April. The prior monthly survey showed job openings in March were steady, at 5.7 million openings for the month.

On Friday, non-farm payrolls came in below economists' expectations, though unemployment ticked lower.

3. The yield curve

The yield curve, the spread between the U.S. 10-year and 2-year Treasury yields that is largely considered a gauge of economic growth health, is on Morganlander's radar heading into Tuesday trading.

"The long end of the yield curve continues to go lower," he said, referring to the yield on the 10-year Treasury note.

He believes that's due to concerns that the central bank will indeed raise its target rate when it convenes next week, as well as perhaps next quarter. That would mean that long-term yields are falling for the same reason that short-term yields are rising.

A flattening yield curve traditionally indicates that bond investors think economic activity is slowing.

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