Traders May Continue To Pick Up Stocks At Reduced Levels

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to extend the recovery seen over the two previous sessions.

Traders may continue to pick up stocks at relatively reduced levels following the considerable weakness seen in the month of April.

During trading on Monday, the Nasdaq and the S&P 500 fell to multi-month lows before recovering to end the day in positive territory.

Trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement this afternoon.

With the Fed widely expected to raise interest rates by 50 basis points, traders are likely to look to the accompanying statement for clues about how aggressively the central bank plans to tighten monetary policy.

U.S. stocks closed slightly higher on Tuesday after a choppy session, with investors largely staying cautious and refraining from making significant moves ahead of the Federal Reserve’s monetary policy announcement.

The major averages all ended modestly higher despite staying quite sluggish for much of the day’s session.

The Dow ended with a gain of 67.29 points or 0.2 percent at 33,128.79 after moving between 32,914.75 and 33,341.58. The S&P 500 settled at 4,175.48, gaining 20.10 points or 0.5 percent, while the Nasdaq moved up 27.74 points or 0.2 percent to 12,563.76.

Some encouraging earnings updates and fairly strong economic data aided sentiment ahead of the central bank’s policy announcement.

The Fed is widely expected to raise interest rate by 50 basis points, the sharpest rate hike in about 22 years. The accompanying statement is eyed for clues about how aggressively the central bank plans to tighten monetary policy.

On the economic front, new orders for U.S. manufactured goods spiked by more than expected in the month of March, according to a report released by the Commerce Department.

The report showed factory orders surged by 2.2 percent in March following a revised 0.1 percent uptick in February. Economists had expected factory orders to jump by 1.1 percent compared to the 0.5 percent drop originally reported for the previous month.

Meanwhile, data showed the number of job openings in the U.S. rose by 205,000 from a month earlier to a series high of 11.549 million in March of 2022.

Boeing shares climbed nearly 3.5 percent. JP Morgan Chase, Verizon, Chevron, 3M and Goldman Sachs gained 1 to 2 percent.

Pfizer shares gained about 2 percent after reporting first-quarter revenues of $25.7 billion, reflecting 82 percent operational growth.

Nike drifted down by about 2.5 percent. Visa, P&G and Microsoft also ended notably lower.

Commodity, Currency Markets

Crude oil futures are surging $3.88 to $106.29 a barrel after tumbling $2.76 to $102.41 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,865.20, down $5.40 compared to the previous session’s close of $1,870.60. On Tuesday, gold rose $7.

On the currency front, the U.S. dollar is trading at 129.80 yen compared to the 130.14 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0546 compared to yesterday’s $1.0521.

Asia

Asian stocks gave up early gains to end broadly lower on Wednesday ahead of the Federal Reserve’s monetary policy announcement due out later in the day.

A 50 basis point rate hike and the launch of balance sheet reduction are on the table, with market participants certainly fearing a more hawkish tone to fight inflation, which is at a four-decade high.

Investors will be watching to see how Fed Chair Jerome Powell frames the future outlook.

Geopolitical tensions also remained on investors’ radar as the EU proposed a gradual ban on Russian oil in the sixth round of sanctions against Moscow.

Markets in China and Japan were closed for holidays. Hong Kong’s Hang Seng Index slumped 1.1 percent to 20,869.52, with shares of Tencent and Alibaba declining 3-4 percent.

Australian markets ended a choppy session slightly lower, with gold and mining stocks pacing the declines on lingering demand worries over top metals consumer China. The benchmark S&P/ASX 200 Index slipped 0.2 percent to 7,304.70.

Banks bucked the weak trend as ANZ beat estimates for first-half profit. In economic releases, the latest retail sales and service sector activity readings painted a positive picture of the economy.

New Zealand’s benchmark S&P/NZX 50 Index finished marginally lower at 11,675.21 after the Reserve Bank said near-term risks to the financial system have increased and that a larger correction in the property market remains a possibility.

New Zealand unemployment held at a record low in the first three months of the year, government data showed earlier in the day.

South Korea’s Kospi average ended 0.1 percent lower at 2,677.57, extending losses for the third day running.

Europe

European stocks have declined on Wednesday, as caution prevails ahead of interest rate decisions from the Federal Reserve and the Bank of England.

Sentiment was also hit after the European Union announced a new sanctions package against Russia, including an embargo on Russian oil.

While the German DAX Index is just below the unchanged line, the U.K.’s FTSE 100 Index is down by 0.3 percent and the French CAC 40 Index is down by 0.6 percent.

Shares of Volkswagen are seeing modest weakness after the German carmaker stuck to its outlook for the current year.

HUGO BOSS has slumped despite the luxury fashion house posting strong sales growth in the first quarter of 2022.

Insurance and asset management company Allianz SE has also moved lower after it joined forces with Sanlam, a pan-African financial services group, to create an African insurance major.

French electric utility EDF has also tumbled. The company reported a jump in first quarter sales, but its core profit outlook was capped by nuclear reactor outages.

Miners Anglo American and Rio Tinto have also moved lower in London following brokerage downgrades.

Online fashion retailer Boohoo has plunged after warning that revenue growth would be impacted in the first half.

On the other hand, shares of HSBC have moved higher after the company launched its planned $1 billion share buyback.

Bookmaking holding company Flutter Entertainment has also jumped after reporting higher revenue in the first quarter, thanks to its fast-expanding U.S. business.

In economic news, German exports fell 3.3 percent month-on-month in March, in contrast to the 6.2 percent expansion seen in February, data showed earlier in the day. Shipments were forecast to drop 2.0 percent.

Overall imports grew 3.4 percent following a 4.7 percent rise in February.

U.S. Economic Reports

A report released by payroll processor ADP on Wednesday showed U.S. private sector job growth slowed by more than expected in the month of April.

ADP said private sector employment increased by 247,000 jobs in April after jumping by an upwardly revised 479,000 jobs in March.

Economists had expected private sector employment to surge by 395,000 jobs compared to the addition of 455,000 jobs originally reported for the previous month.

The Commerce Department also released a report showing the U.S. trade deficit widened to a new record in the month of March.

The report showed the trade deficit widened to $109.8 billion in March from a revised $89.8 billion in February. Economists had expected the deficit to widen to $107.0 billion from the $89.2 billion originally reported for the previous month.

The wider trade deficit came as the value of imports soared by 10.3 percent to $351.5 billion, while the value of exports jumped by 5.6 percent to $241.7 billion.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of April.

The ISM’s services PMI is expected to inch up to 58.5 in April from 58.3 in March, with a reading above 50 indicating growth in the sector.

The Energy Information Administration is due to release its report on oil inventories in the week ended April 29th at 10:30 am ET.

Crude oil inventories are expected to decrease by 1.2 million barrels after edging up by 0.7 million barrels in the previous week.

At 2 pm ET, the Federal Reserve is scheduled to announce its latest monetary policy decision, followed by Fed Chair Jerome Powell’s post-meeting press conference at 2:30 pm ET.

Stocks In Focus

Shares of Lyft (LYFT) are moving sharply lower in pre-market trading after the ride-hailing company reported better than expected first quarter results but provided disappointing guidance for the current quarter.

Storage products company Tupperware (TUP) is also likely to come under pressure after reporting first quarter results that missed analyst estimates and withdrawing its full-year guidance.

On the other hand, shares of Advanced Micro Devices (AMD) are seeing significant pre-market strength after the chipmaker reported better than expected first quarter results and provided an upbeat forecast.

Vacation rental company Airbnb (ABNB) is also likely to move to the upside after reporting a narrower than expected first quarter loss on revenues that exceeded analyst estimates.