Traders May Take A Breather Following Recent Volatility

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to turn in a relatively lackluster performance following recent volatility.

Uncertainty about the near-term outlook for the markets may keep some traders on the sidelines following the strong rebound seen in the previous session.

The rebound during trading on Tuesday came on the heels of a three-day losing streak that dragged the tech-heavy Nasdaq down to its lowest closing level in over two months.

Some traders may also look to get a head start on the holiday weekend, as the markets will be closed for Christmas Eve on Friday.

After ending Monday’s trading sharply lower, stocks showed a substantial move back to the upside during trading on Tuesday. The major averages moved higher in early trading and climbed more firmly into positive territory as the day progressed.

The major averages reached new highs for the session going into the close. The Dow surged 560.54 points or 1.6 percent to 35,492.70, the Nasdaq spiked 360.14 points or 2.4 percent to 15,341.09 and the S&P 500 jumped 81.21 points or 1.8 percent to 4,649.23.

Bargain hunting contributed to the strength on Wall Street, as traders picked up stocks at somewhat reduced levels on the heels of recent weakness.

Chipmaker Micron Technology (MU) help lead a rebound by tech stocks after reporting better than expected fiscal first quarter results and providing upbeat guidance.

Shares of Nike (NKE) and Rite Aid (RAD) also posted standout gains after the companies reported quarterly results that beat expectations.

The rebound on Wall Street also came after a report from Moderna (MRNA) about the effectiveness of a booster dose of its Covid-19 vaccine against the Omicron variant.

Moderna announced that a booster dose of its Covid-19 vaccine increased antibody levels against Omicron.

The currently authorized 50 microgram booster dose increased neutralizing antibody levels against Omicron approximately 37-fold compared to pre-boost levels, Moderna said.

Airline stocks turned in some of the market’s best performances on the day, with the NYSE Arca Airline Index soaring by 5.3 percent.

Substantial strength was also visible among energy stocks, which benefited from a significant rebound by the price of crude oil.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 5.2 percent and the NYSE Arca Oil Index shot up by 3.5 percent.

Micron helped lead a rally by semiconductor stocks, resulting in a 3.4 percent jump by the Philadelphia Semiconductor Index.

Computer hardware, financial and software stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are inching up $0.16 to $71.28 a barrel after spiking $2.51 to $71.12 a barrel a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,791.80, up $3.10 compared to the previous session’s close of $1,788.70. On Tuesday, gold fell $5.90.

On the currency front, the U.S. dollar is trading at 114.22 yen compared to the 114.10 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1305 compared to yesterday’s $1.1285.

Asia

Asian stocks saw muted gains on Wednesday after Wall Street’s main indexes ended sharply higher overnight, led by gains in tech and travel shares.

The upside was limited as a jump in coronavirus cases globally threatened economic activity just days before Christmas and New Year holidays.

Chinese shares ended marginally lower despite an assurance from a senior state planner to keep growth stable in the world’s second largest economy. Hong Kong’s Hang Seng Index climbed 0.6 percent to 23,102.33 as Chinese tech stocks staged a muted rebound.

Japanese markets advanced, with chipmakers and other tech stocks pacing the gainers. The Nikkei 225 Index rose 44.62 points, or 0.2 percent, to 28,562.21, while the broader Topix closed marginally higher at 1,971.51.

Sony surged 2.8 percent after its Indian subsidiary finalized a deal with local rival Zee Entertainment to merge their television channels, film assets and streaming platforms.

Australian markets ended a choppy session slightly higher as technology and healthcare stocks extended gains to a third straight session.

The benchmark S&P/ASX 200 Index edged up 0.1 percent to 7,364.80 as the government renewed its vaccination push. The broader All Ordinaries Index ended up 0.2 percent at 7,682.60.

Link Administration surged 15 percent after receiving a $2.48 billion buyout bid from Canada’s cloud-based software company Dye & Durham.

Rio Tinto shares fell 2 percent after the miner signaled it intends to become a significant player in the global lithium market.

Lithium miner Pilbara Minerals surged 8.8 percent and Liontown Resources rallied 4 percent. Tech heavyweight Afterpay jumped 5.4 percent after hitting a 52-week low on Tuesday.

Seoul stocks rose for a second straight session as chipmakers followed their global peers higher. The Kospi rose 9.45 points, or 0.3 percent, to 2,984.48. Market bellwether Samsung Electronics gained 1.7 percent and No. 2 chipmaker SK Hynix rallied 2 percent.

Europe

European stocks are roughly flat on Wednesday, as Omicron worries ease somewhat and U.S. President Joe Biden said it is still possible to reach a deal with Senator Joe Manchin to push the $2 trillion Build Back Better bill through Congress.

The U.K.’s FTSE 100 Index, the French CAC 40 Index and the German DAX Index are currently all nearly unchanged.

Delivery Hero shares have soared. The food delivery group said it would scale down its Foodpanda operations in Germany and sell the subsidiary’s Japan unit.

German consumer major Beiersdorf AG has also risen. The company said that it has reached an agreement with the shareholders of Chantecaille Beaute Inc., USA, to buy prestige skin care business Chantecaille.

Julius Baer has also edged modestly higher on news its Chief Financial Officer Dieter Enkelmann is stepping down.

Meanwhile, Wizz Air Holdings has moved lower. The Swiss airline company said that it has acquired 15 daily slot pairs from Norwegian Air Shuttle at Gatwick airport. The financial terms of the deal were not known.

In economic news, revised data showed that the U.K. economy expanded less than estimated in the third quarter.

Gross domestic product grew 1.1 percent sequentially versus the 1.3 percent previously estimated. This follows a revised increase of 5.4 percent in the second quarter.

The level of GDP was 1.5 percent below where it was pre-coronavirus in the fourth quarter of 2019, revised down from the prior estimate of 2.1 percent.

U.S. Economic Reports

U.S. gross domestic product increased by more than previously estimated in the third quarter of 2021, according to revised data released by the Commerce Department on Wednesday.

The report said real GDP surged by 2.3 percent in the third quarter, reflecting an upward revision from the previously estimated 2.1 percent jump. Economists had expected the pace of GDP growth to be unrevised.

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of November.

Existing home sales are expected to jump 2.8 percent to an annual rate of 6.52 million in November from a rate of 6.34 million in October.

The Conference Board is also due to release its report on consumer confidence in the month of December at 10 am ET. The consumer confidence index is expected to inch up to 110.7 in December from 109.5 in November.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended December 17.

Crude oil inventories are expected to edge slightly lower after slumping by 4.6 million barrels in the previous week.

Stocks In Focus

Shares of CalAmp (CAMP) are moving sharply lower in pre-market trading after the wireless communications company reported an unexpected fiscal third quarter loss on revenues that missed analyst estimates.

Chinese e-commerce company Alibaba (BABA) may also come under pressure after Atlantic Equities downgraded its rating on the company’s stock to Neutral from Overweight.

On the other hand, shares of CarMax (KMX) are likely to see initial strength after the auto retailer reported fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines.

Household products retailer Williams-Sonoma (WSM) may also move to the upside after Loop Capital upgraded its rating on the company’s stock to Buy from Hold.