U.S. Stocks May Show A Lack Of Direction In Early Trading

Following the upward move seen in the previous session, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures down by just 0.1 percent.

Traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets following recent volatility.

While worries about inflation contributed to a pullback by stocks last week, the Nasdaq and S&P 500 ended Tuesday’s trading just shy of their record closing highs following upbeat retail sales and industrial production data.

With the economy seemingly holding up well in the face of elevated inflation, traders remain concerned the Federal Reserve could accelerate its plans to tighten monetary policy.

A mixed reaction to earnings news from retail giants Target (TGT) and Lowe’s (LOW) may also contribute to choppy trading on Wall Street.

Shares of Target are seeing notable pre-market weakness even though the retailer reported third quarter results that beat expectations on both the top and bottom lines.

On the other hand, shares of Lowe’s (LOW) are likely to see initial strength after the home improvement retailer reported better than expected third quarter results and raised its full-year revenue guidance.

In U.S. economic news, the Commerce Department released a report showing an unexpected decrease in new residential construction in the month of October, although the report also showed a bigger than expected spike in building permits.

The report showed housing starts slid by 0.7 percent to an annual rate of 1.520 million in October after tumbling by 2.7 percent to a revised rate of 1.530 million in September.

The continued decline came as a surprise to economists, who had expected housing starts to jump by 1.6 percent to an annual rate of 1.580 million from the 1.555 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits surged up by 4.0 percent to an annual rate of 1.650 million in October after plummeting by 7.8 percent to a revised rate of 1.586 million in September.

Building permits, an indicator of future housing demand, had been expected to shoot up by 3.2 percent to an annual rate of 1.640 million from the 1.589 million originally reported for the previous month.

After ending Monday’s session roughly flat, stocks moved mostly higher during trading on Tuesday. The major averages all moved to the upside on the day, although buying interest waned as the trading day progressed.

The Dow and the S&P 500 pulled back well off their highs in late-day trading, while the tech-heavy Nasdaq remained firmly positive.

The Nasdaq advanced 120.01 points or 0.8 percent to 15,973.86, just shy of the record closing high set last Monday. The S&P 500 also ended the day just below its record closing high, up 181.0 points or 0.4 percent to 4,700.90.

Meanwhile, the Dow ended the day up 54.77 points or 0.2 percent at 36,142.22 after rising by more than 200 points earlier in the session.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index slid by 0.4 percent, while Hong Kong’s Hang Seng Index fell by 0.3 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.4 percent, the French CAC 40 Index and the German DAX Index are both up by 0.1 percent.

In commodities trading, crude oil futures are falling $0.75 to $80.01 a barrel after edging down $0.12 to $80.76 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,863.80, up $9.70 compared to the previous session’s close of $1,854.10. On Tuesday, gold slid $12.50.

On the currency front, the U.S. dollar is trading at 114.65 yen compared to the 114.82 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1308 compared to yesterday’s $1.1320.