U.S. Stocks May Give Back Ground After Yesterday’s Rally

After moving sharply higher over the course of the previous session, stocks may give back ground in early trading on Wednesday. The major index futures are currently pointing to a modestly lower open for the markets, with the S&P 500 futures down by 0.2 percent.

Weakness among semiconductor stocks may weigh on the markets after a report from the Wall Street Journal said the Biden administration is considering new restrictions on exports of artificial intelligence chips to China.

Citing people familiar with the situation, the Journal said the Commerce Department could move as soon as early next month to stop the shipments of chips to customers in China and other countries of concern without first obtaining a license.

The Journal noted the potential restrictions come amid concerns China could use AI chips for weapon development and hacking.

Chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) are seeing significant pre-market weakness following the report.

Early trading may be somewhat subdued, however, as traders look ahead to remarks by Federal Reserve Chair Jerome Powell in a panel discussion at the European Central Bank Forum on Central Banking in Sintra, Portugal.

Powell will be joined by European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Japan Governor Kazuo Ueda.

“Often in these situations, policymakers will stick to the script, preferring to leave big announcements for meetings and certain high-profile events,” said Craig Erlam, Senior Market Analyst at OANDA. “But with so many heads appearing at the same time, there’s every chance at least one says something that will either rattle or stimulate the markets.”

“To make this event more intriguing, they’re all contending with very similar issues and yet their individual situations are quite different, which could make the discussion all the more interesting,” he added.

Stocks moved sharply higher over the course of the trading day on Tuesday, regaining ground following recent weakness. The major averages all moved to the upside on the day, with the Dow snapping a six-session losing streak.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Nasdaq surged 219.89 points or 1.7 percent to 13,555.67, the S&P 500 jumped 49.59 points or 1.2 percent to 4,378.41 and the Dow climbed 212.03 points or 0.6 percent to 33,926.74.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index spiked by 2.0 percent, while South Korea’s Kospi slid by 0.7 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.’s FTSE 100 Index has climbed by 0.7 percent, the German DAX Index and the French CAC 40 Index are both up by 0.8 percent.

In commodities trading, crude oil futures are sliding $0.44 to $67.26 a barrel after tumbling $1.67 to $67.70 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,916.30, down $7.50 compared to the previous session’s close of $1,923.80. On Tuesday, gold fell $10.

On the currency front, the U.S. dollar is trading at 144.41 yen compared to the 144.07 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0928 compared to yesterday’s $1.0961.