Bargain Hunting May Contribute To Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside following the sell-off seen in the previous session.

Bargain hunting may contribute to initial strength on Wall Street, as some traders look to pick up stocks at relatively reduced levels.

The steep drop seen on Tuesday dragged the Nasdaq down to its lowest closing level in over a year, while the Dow and the S&P 500 tumbled to one-month closing lows.

A positive reaction to the latest earnings news may also generate buying interest, with shares of Microsoft (MSFT) moving sharply higher in pre-market trading after the software giant reported better than expected quarterly results and provided upbeat guidance.

Credit card giant Visa (V) is also likely to move to the upside after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Google parent Alphabet (GOOGL) may come under pressure after the company reported weaker than expected first quarter results.

After recovering from an early sell-off on Monday, stocks showed a substantial move back to the downside during trading on Tuesday. The tech-heavy Nasdaq led the way lower, plunging to its lowest closing level in over a year, while the Dow and the S&P 500 tumbled to one-month closing lows.

The major averages fell to new lows for the day going into the close of trading. The Dow dove 809.28 points or 2.4 percent to 33,240.19, the Nasdaq plummeted 514.11 points or 4 percent to 12,490.74 and the S&P 500 slumped 120.92 points or 2.8 percent to 4,175.20.

The sell-off on Wall Street came as elevated inflation, Covid-19 lockdowns in China and the ongoing war in Ukraine continued to weigh on investors’ minds as they digest the latest earnings news.

Airline stocks turned in some of the market’s worst performances on the day, resulting in a 4.9 percent nosedive by the NYSE Arca Airline Index.

Substantial weakness was also visible among semiconductor stocks, as reflected by the 4.4 percent plunge by the Philadelphia Semiconductor Index.

Biotechnology stocks also showed a significant move to the downside, dragging the NYSE Arca Biotechnology Index down by 4.3 percent.

Brokerage, networking and steel stocks also saw considerable weakness, reflecting the broad based selling pressure on Wall Street.

On the U.S. economic front, a report released by the Commerce Department showed new orders for U.S. manufactured durable goods rebounded in the month of March.

On the U.S. economic front, a report released by the Commerce Department showed new orders for U.S. manufactured durable goods rebounded in the month of March.

The report showed durable goods orders climbed by 0.8 percent in March after tumbling by a revised 1.7 percent in February.

Economists had expected durable goods orders to jump by 1.0 percent compared to the 2.2 percent slump originally reported for the previous month.

Excluding orders for transportation equipment, durable goods orders surged by 1.1 percent in March after falling by 0.5 percent in February. Ex-transportation orders were expected to increase by 0.6 percent.

A separate report released by the Commerce Department on Tuesday showed a steep drop in U.S. new home sales in the month of March.

The Commerce Department said new home sales plunged by 8.6 percent to an annual rate of 763,000 from an upwardly revised rate of 835,000 in February.

Economists had expected new home sales to decrease by 0.9 percent to a rate of 765,000 from the 772,000 originally reported for the previous month.

The Conference Board also released a report showing a modest decrease in U.S. consumer confidence in the month of April.

The Conference Board said its consumer confidence index edged down to 107.3 in April from an upwardly revised 107.6 in March.

Economists had expected the consumer confidence index to dip to 106.8 from the 107.2 originally reported for the previous month.

Commodity, Currency Markets

Crude oil futures are slipping $0.50 to $101.20 a barrel after surging $3.16 to $101.70 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,904.60, up $0.50 compared to the previous session’s close of $1,904.10. On Tuesday, gold climbed $8.10.

On the currency front, the U.S. dollar is trading at 128.08 yen compared to the 127.23 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0563 compared to yesterday’s $1.0638.

Asia

Stock markets in Asia ended trading on a mixed note on Wednesday amidst a recovery in the Chinese benchmarks and a muted sentiment in the other bourses. Beijing pledging further support for growth helped a rebound in the Chinese indexes whereas Japanese stocks tracked the overnight losses on Wall Street.

China’s Shanghai Composite Index jumped 71.86 points or 2.5 percent to finish at 2,958.28. The day’s trading ranged between 2,863.65 and 2,959.18. The Shenzhen Component Index soared 4.4 higher to close at 10,652.90.

The Japanese benchmark Nikkei 225 Index tumbled 313.48 points or 1.2 percent to end Wednesday’s trading at a two-week low of 26,386.63.

Beverage business Sapporo Holdings led the price charts with a more than 7 percent overnight rally. Logistics business Nippon Yusen gained almost 5.5 percent. Utilities business Osaka Gas and beer maker Asahi Group Holdings both gained more than 4 percent. International shipping business Mitsui O.S.K lines has gained 3.8 percent.

Packaged food maker Kikkoman Corp plunged more than 12 percent following disappointing quarterly results. Fanuc Corp, Cyber Agent, and Yokohama Rubber all dropped more than 5 percent. Nomura Holdings declined a little less than 5 percent.

The Hang Seng Index of the Hong Kong Stock Exchange inched up 11.65 points or 0.1 percent from the previous close to finish trading at 19,946.36.

The Korean Stock Exchange’s Kospi Index shed 29.25 points or 1.1 percent to close at 2,639.06. The day’s trading range was between 2,591.53 and 3316.08.

Australia’s S&P/ASX200 Index closed trading at a 20-day low of 7,261.20 after dropping 56.80 points or 0.8 percent.

Whitehaven Coal was the top gainer with a 5.5 percent surge. Commercial and professional services business Downer Edi followed with a 4.7 percent rally. Minerals business Champion Iron, insurance company NIB Holdings and materials business South32 gained more than 3 percent.

Life360 plunged more than 29 percent following the scrapping of its U.S. listing plans. Diversified financials business Credit Corp Group and gambling business PointsBet Holdings dropped close to 9 percent. EML Payments and materials business Northern Star Resources declined more than 5 percent.

Europe

European stocks have turned positive on Wednesday following the previous day’s mostly lower trading, despite worries of a slowdown in global growth as well as concerns over gas supplies being cut to Poland and Bulgaria by Russia.

Russian energy giant Gazprom said it has turned off gas supplies to the two countries Wednesday morning, and that exports will not be restored until payments are made in the Russian currency.

While the U.K.’s FTSE 100 Index has advanced by 0.7 percent, the German DAX Index and the French CAC 40 Index are up by 0.4 percent and 0.3 percent, respectively.

German consumer confidence is expected to decline further to a new historic low in May, according to survey results from the market research group GfK.

In Finland, separate survey results showed that consumer confidence weakened to the lowest since April 2020, and industrial morale remained unchanged in April. Statistics Finland said the consumer sentiment index decreased -11.7 in April from to -10.5 in March.

In the corporate space, several European banks reported their earnings. Credit Suisse Group AG shares were down after the Swiss banking major reported a wider net loss in its first quarter reflecting litigation expenses and weak revenues.

Deutsche Bank has also moved to the downside despite reporting higher profit and revenues in its first quarter.

Shares of Lloyds Banking Group has gained after the British bank raised its fiscal 2022 outlook for banking net interest margin despite reporting weak first quarter results.

Swedish financial group Skandinaviska Enskilda Banken AB or SEB have jumped on higher first quarter results.

Among others, German automotive giant Mercedes-Benz Group AG were gaining after the company reported higher first quarter results and maintained its fiscal 2022 outlook.

Shares of Symrise AG were up after the German maker of flavors and fragrances reported strong sales growth in the first quarter, and confirmed fiscal 2022 and medium term targets.

British drug maker GlaxoSmithKline Plc were gaining after reporting strong growth in first quarter earnings and turnover. The company also reconfirmed its full-year 2022 guidance.

Public transport company Go-Ahead has moved higher after it said fiscal 2022 results would be ahead of view, despite slightly lower first-half pre-tax profit.

Among the losers, Puma shares have fallen despite higher profit and sales in the first quarter with improved demand.

Uniper SE is also trading lower after the German electrical utility company said it expects to report a loss for the first quarter, below the current market expectations mainly due to gas storage optimization. The company further backed its fiscal 2022 earnings expectations.

Insurer AVEVA Group plc’s shares have plunged after the company said it expects revenue growth to be lower in fiscal 2023 than 2022.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on pending home sales in the month of March at 10 am ET. Pending home sales are expected to slump by 1.6 percent in March after plunging by 4.1 percent in February.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended April 22nd.

Crude oil inventories are expected to increase by 2.0 million barrels after tumbling by 8.0 million barrels in the previous week.

The Treasury Department is scheduled to announce the results of this month’s auction of $49 billion worth of five-year notes at 1 pm ET.