Traders May Continue To Pick Up Stocks At Relatively Reduced Levels

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside after ending the previous session mostly lower.

Stocks may attempt to extend the recovery attempt seen following the sharp pullback in early trading on Tuesday.

The major averages regained ground but still ended the day in the red after falling to their lowest intraday levels in almost a month.

Trading activity is likely to remain somewhat subdued, however, as traders look ahead to the release of key inflation data in the coming days.

The reports on consumer and producer prices, which are due to be released on Thursday and Friday, respectively, could have a significant impact on the outlook for interest rates.

After a weak start and a subsequent sharp fall, stocks recovered gradually during trading on Tuesday but still ended the session in negative territory.

The major averages all ended notably lower but well off the session’s lows. The Dow, which was down by about 470 points at one point, ended the day with a loss of 158.64 points or 0.5 percent at 35,314.49.

The S&P 500 settled with a loss of 19.06 points or 0.4 percent at 4,499.38, off the day’s low of 4,464.39. The Nasdaq, which dropped as low as 13,769.34, ended with a loss of 110.07 points or 0.8 percent at 13,884.32.

The sharp early setback was due to concerns about global economic growth after data showed Chinese exports and imports both fell more than expected in July, threatening recovery prospects and adding to pressure on policymakers to unveil additional stimulus.

In U.S. economic news, data showed the U.S. trade deficit narrowed to a 3-month low of $65.5 billion in June from a downwardly revised $68.3 billion in May. Imports fell 1 percent in the month, while exports edged down 0.1 percent.

Wholesale inventories in the United States were down 0.5 percent from a month earlier in June, compared to the preliminary estimate of a 0.3 percent decrease and following an upwardly revised 0.4 percent decrease in the prior month.

A report from the National Federation of Independent Business said the NFIB Small Business Optimism index rose for a third straight month to 91.9 in July, the highest reading since November 2022.

Bank shares were under pressure after Moody’s cut ratings for 10 small and midsize lenders and warned six big banks might be downgraded as well.

Salesforce.com and Goldman Sachs both ended nearly 2% down. Travelers Companies, Walgreens Boots Alliance, Microsoft, Intel, JP Morgan Chase, and McDonald’s also ended notably lower.

Amgen shares rallied more than 3 percent. Walt Disney climbed nearly 1.5 percent. Apple, Caterpillar and Merck posted modest gains.

Commodity, Currency Markets

Crude oil futures are climbing $0.76 to $83.68 a barrel after jumping $0.98 to $82.92 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,958.60, down $1.30 compared to the previous session’s close of $1,959.90. On Tuesday, gold fell $10.10.

On the currency front, the U.S. dollar is trading at 143.45 yen compared to the 143.38 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0976 compared to yesterday’s $1.0956.

Asia

Asian stocks ended mixed on Wednesday amid worries about the U.S. banking system and fresh signs of weakening domestic demand in China.

Investors also awaited U.S. consumer and wholesale inflation data due this week for clues on future interest rate hikes.

Economists expect Thursday’s data to show U.S. consumer prices rose by an annual 3.3 percent in July, up from 3 percent in the previous month.

China’s Shanghai Composite Index dropped 0.5 percent to 3,244.49 as weak inflation data revived worries about slowing growth in the world’s second largest economy.

Chinese consumer price inflation fell an annual 0.3 percent in July and the producer price index fell by 4.4 percent – heightening deflation risks and raising fresh concerns about economic recovery.

Hong Kong’s Hang Seng Index finished 0.3 percent higher at 19,246.03 after a choppy session.

The intraday rebound came as China’s slide into inflation and problems at Country Garden, once China’s largest developer, increased calls for more stimulus.

Japanese shares snapped a three-session winning streak as caution gripped markets ahead of the release of U.S. inflation data.

The Nikkei 225 Index fell 0.5 percent to 32,204.33, while the broader Topix Index settled 0.4 percent lower at 2,282.57.

Air conditioning maker Daikin Industries slumped 11.4 percent after its first-quarter earnings fell short of estimates.

Tech investor SoftBank Group lost 3.1 percent after posting a surprise loss. Nikon plummeted 11.2 percent after the camera maker reported a 78 percent drop in its first-quarter net profit.

Seoul stocks rallied to snap a five-day losing streak after comments from a couple of Fed officials suggested that rate hikes could be over. The Kospi jumped 1.2 percent to 2,605.12, marking the first daily gain since August 2.

Samsung Electronics, Naver, LG Electronics, Samsung SDI surged 2-3 percent, while LG Energy Solution soared 5.3 percent.

Australian markets ended modestly higher after Commonwealth posted a record annual profit. The benchmark S&P ASX 200 Index rose 0.4 percent to 7,338.00, while the broader All Ordinaries Index closed 0.3 percent higher at 7,543.40.

Commonwealth rallied 2.6 percent, while peers ANZ, NAB and Westpac climbed 1-2 percent.

Europe

European stocks have rebounded on Wednesday, with banks and miners leading the surge.

The pan European STOXX 600 Index has climbed by 0.6 percent after declining 0.2 percent on Tuesday.

The French CAC 40 Index is up by 0.9 percent, the German DAX Index is up by 0.8 percent and the U.K.’s FTSE 100 Index is up by 0.7 percent.

The euro has edged up against the dollar ahead of U.S. inflation readings due this week that might influence the Fed’s rate trajectory.

Italian lenders Intesa Sanpaolo and UniCredit have jumped after the country’s finance ministry clarified that that a new windfall tax on banks would not amount to more than 0.1 percent of their assets.

Monte dei Paschi di Siena and Banco BPM have also moved sharply higher, while Commerzbank, Deutsche Bank and BNP Paribas have also advanced.

Coca-Cola HBC has also surged after the bottling firm lifted its full-year organic revenue growth view and backed EBIT forecast.

Infrastructure products group Hill & Smith has also soared after delivering a record trading performance in its first half.

Vestas Wind Systems, the world’s leading manufacturer of wind turbines, has also rallied after narrowing its second quarter loss and maintaining its full-year outlook.

Delivery Hero has also spiked after the German online takeaway food company upgraded its revenue guidance.

Miners Anglo American, Antofagasta and Glencore have also climbed in London after data showed Chinese consumer prices slipped into deflation territory in July amid weakening domestic demand, raising hopes for more policy stimulus.

On the other hand, Dutch lender ABN Amro has fallen after delaying a decision on share buybacks to the last quarter.

Flutter Entertainment shares have also slumped despite the online betting firm reporting a return to profitability for the first half of the year.

U.S. Economic Reports

The Energy Information Administration is due to release its report on oil inventories in the week ended August 4th at 10:30 am ET.

Crude oil inventories are expected to edge up by 0.6 million barrels after plunging by 17.0 million barrels in the previous week.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $38 billion worth of ten-year notes.