Profit Taking May Contribute To Initial Pullback On Wall Street

The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to give back ground after trending higher over the past few sessions.

Traders may look to cash in on some of the recent strength in the markets after the strong upward move seen on Tuesday lifted the Nasdaq and the S&P 500 to two-month closing highs and the Dow reached its best closing level in a month.

Waning optimism about peace talks between Russia and Ukraine may also weigh on Wall Street after Ukraine said Russia has violated its pledge to reduce military activity in Kyiv and Chernihiv by continuing to attack both the battlefronts.

After the latest round of ceasefire talks between the two delegations in Istanbul on Tuesday, Russia’s Defense Ministry said it would “drastically reduce military activity” on the two Ukrainian cities.

Russia’s Deputy Defense Minister Alexander Fomin told reporters that the decision to ease the invasion was taken in response to Ukraine’s proposal in Tuesday’s three-hours-long talks to become a neutral and non-nuclear state in exchange for security guarantees.

Russia’s offer was met with skepticism by Ukrainian President Volodymyr Zelensky and other western leaders. Zelensky called for tighter sanctions against Russia.

After holding in positive territory throughout the day’s session, U.S. stocks closed on a firm note on Tuesday, with technology shares turning in another strong performance.

The major averages all ended with solid gains. The Dow closed with a gain of 338.30 points or 1 percent at 35,294.19. The S&P 500 closed higher by 56.08 points or 1.2 percent at 4,631.60, and the Nasdaq settled at 14,619.64 with a gain of 264.73 points or 1.8 percent.

Reports about encouraging progress in the cease-fire talks between Russia and Ukraine in Turkey helped lift investor sentiment.

According to a Reuters report, Russia’s deputy defense minister has said that Russia has decided to drastically cut its military activity focused on Kyiv and Chernihiv. Ukrainian negotiators proposed adopting neutral status in exchange for security guarantees.

Investors also digested the latest batch of economic data. A report from the Labor Department showed the number of job openings in the United States was 11.266 million in February of 2022, little changed from an upwardly revised 11.283 million in January.

The S&P CoreLogic Case-Shiller 20-city home price index in the U.S. rose 19.1 percent year-over-year in January of 2022, the most since September, following a revised 18.9 percent increase in the previous month

A report released by the Conference Board showed an unexpected improvement in U.S. consumer confidence in the month of March.

The report showed the Conference Board’s consumer confidence index rose to 107.2 in March from a revised 105.7 in February. Economists had expected the index to dip to 107.0 in March from the 110.5 originally reported for the previous month.

Automobile and travel related stocks had a good outing, while energy stocks fell on weak crude oil prices.

Ford shares rallied more than 6 percent. General Motors ended stronger by about 4.6 percent.

Shares of Nielsen Holdings soared 20 percent on reports that a group of private equity investors have signed a deal to buy the firm for $16 billion.

Uber Technologies Inc. shares surged higher on reports the company is closing in on a deal with a San Francisco company to add more taxis to its platform.

Visa, Nike, Boeing, Salesforce.com and Walt Disney moved up 2.5 to 3.4 percent. McDonalds, Apple, Microsoft, 3M, Intel and Goldman Sachs gained 1.2 to 2.2 percent.

Commodity, Currency Markets

Crude oil futures are surging $3.09 to $107.33 a barrel after slumping $1.72 to $104.24 a barrel a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,933.40, up $15.40 compared to the previous session’s close of $1,918. On Tuesday, gold tumbled $26.70.

On the currency front, the U.S. dollar is trading at 121.76 yen compared to the 122.88 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1125 compared to yesterday’s $1.1086.

Asia

Asian stocks rose broadly on Wednesday amid optimism around a peaceful resolution of the Ukraine war. Russia on Tuesday promised to scale down military operations around Ukraine’s capital Kyiv, while Ukraine proposed adopting a neutral status in face-to-face negotiations.

Chinese shares led regional gains as investors awaited more stimulus measures to support slowing growth. The benchmark Shanghai Composite Index jumped 2 percent to close at 3,266.60, led by gains in the property sector. Hong Kong’s Hang Seng Index rallied 1.4 percent to finish at 22,232.03.

Japanese shares bucked the regional trend to end lower, as investors booked profits heading into the end of the fiscal year. The Nikkei 225 Index fell 225 points, or 0.8 percent, to settle at 28,027.25 after having hit a 10-week high in the previous session.

Nintendo shares plunged 5.8 percent after the video game maker delayed the launch of a much-awaited game. Shippers declined on fears of easing demand, with Nippon Yusen losing as much as 8.6 percent.

In economic releases, retail sales data released earlier in the day disappointed, adding to fears of a stalled recovery.

Australian markets rose for the seventh straight session, with technology companies and financials leading the surge on hopes of a possible end to the Russia-Ukraine conflict.

The benchmark S&P/ASX 200 Index closed 0.7 percent higher at 7,514.50 as the government unveiled a stimulatory budget ahead of this year’s federal election.

Block Inc. shares soared 6.1 percent, while Xero surged 5.3 percent to its highest level since mid-February. Mining and energy stocks underperformed as commodity prices eased from their peaks.

Seoul stocks eked out modest gains, with the Kospi edging up 0.2 percent to 2,746.74, extending gains for the second straight session. SK Hynix, Naver, Hyundai Motor and Samsung Biologics were among the prominent gainers.

Europe

European stocks are moving lower on Wednesday after seeing sharp gains the previous day on hopes for a breakthrough in Russia-Ukraine peace talks.

Ukraine reacted with skepticism to Russia’s promise in negotiations to scale down military operations, while the United States warned the threat isn’t over.

U.S President Joe Biden asked whether the Russian announcement was a sign of progress in the talks or an attempt by Moscow to buy time to continue its assault.

While the U.K.’s FTSE 100 Index is nearly unchanged, the French CAC 40 Index is down by 1 percent and the German DAX Index is down by 1.8 percent.

Norway’s Aker Offshore Wind AS has plunged after it announced an all-stock merger to be combined with Aker Horizons ASA.

Stratec SE, a manufacturer of automated analyzer systems, has also tumbled after its fourth-quarter earnings per share fell 63 percent.

Meanwhile, Savannah Resources, a lithium development company, has risen after it has signed a Memorandum of Understanding with Swiss technology major ABB Ltd.

q.beyond AG has also jumped. The German company said it plans to increase 2022 revenues by at least 16 percent to between 180 million euros and 200 million euros.

In economic news, U.K. shop prices increased at the fastest pace in more than a decade in March, data released by the British Retail Consortium showed earlier today.

The shop price index advanced 2.1 percent on a yearly basis in March, following a 1.8 percent rise in February. This was the fastest increase since September 2011. Non-food prices were up 1.5 percent.

U.S. Economic Reports

Private sector employment in the U.S. increased by slightly more than expected in the month of March, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment jumped by 455,000 jobs in March after surging by an upwardly revised 486,000 jobs in February.

Economists had expected private sector employment to climb by 450,000 jobs compared to the addition of 475,000 jobs originally reported for the previous month.

A separate report released by the Commerce Department on Wednesday showed the U.S. economy grew by slightly less than previously estimated in the fourth quarter of 2021.

The Commerce Department said real gross domestic product increased by 6.9 percent in the fourth quarter, reflecting a modest downward revision from the previously estimated 7.0 percent spike. Economists had expected GDP growth to be unrevised.

The slightly slower than previously estimated GDP growth primarily reflected downward revisions to consumer spending and exports that were partly offset by an upward revision to private inventory investment.

Richmond Federal Reserve President Thomas Barkin is scheduled to give opening remarks virtually to hybrid Investing in Rural America Conference hosted by the Richmond Fed at 9:15 am ET.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended March 25th.

Crude oil inventories are expected to dip by 1.0 million barrels after falling by 2.5 million barrels in the previous week.

Kansas City Federal Reserve President Esther George is scheduled to speak virtually on the economic and monetary policy outlook before the Economic Club of New York at 1 pm ET.