U.S. Stocks May See Further Downside In Early Trading

After ending the previous session mostly lower, stocks may see further downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.5 percent.

Ongoing uncertainty about the outlook for interest rates may weigh on Wall Street amid recent concerns the Federal Reserve won’t lower rates as early as previously anticipated.

Potentially adding to worries the Fed will hold off on cutting rates, the Commerce Department released a report this morning showing U.S. retail sales increased by more than expected in the month of December.

The report said retail sales climbed by 0.6 percent in December after rising by 0.3 percent in November. Economists had expected retail sales to advance by 0.4 percent.

Excluding a jump in sales by motor vehicle and parts dealers, retail sales rose by 0.4 percent in December after inching up by 0.2 percent in November. Ex-auto sales were expected to edge up by another 0.2 percent.

The Labor Department also released a report showing import prices in the U.S. unexpectedly came in unchanged in the month of December.

The Labor Department said import prices were unchanged in December after declining by a revised 0.5 percent in November.

Economists had expected import prices to decrease by 0.5 percent compared to the 0.4 percent drop originally reported for the previous month.

Meanwhile, the report said export prices slumped by 0.9 percent for the third consecutive month. Export prices were expected to fall by 0.6 percent.

The downward momentum on Wall Street also comes amid continue increase in treasury yields, with the yield on the benchmark ten-year note climbing further above 4.0 percent.

Shortly before the start of trading, the Federal Reserve is due to release its report on industrial production in the month of December. Industrial production is expected to come in unchanged in December after inching up by 0.2 percent in November.

The Commerce Department is also scheduled to release its report on business inventories in the month of November not long after the open. Business inventories are expected to edge down by 0.1 percent.

Additionally, the National Association of Home Builders is due to release its report homebuilder confidence in the month of January. The housing market index is expected to rise to 39 in January from 37 in December.

Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

U.S. stocks closed notably lower on Tuesday as higher Treasury yields and concerns that the Federal Reserve may not cut interest rates anytime soon hurt sentiment.

The major averages all ended in the red, with the Dow finishing with a more pronounced loss. The Dow settled with a loss of 231.86 points or 0.6 percent at 37,361.12. The S&P 500 ended down 17.85 points or 0.4 percent at 4,765.98.

The Nasdaq, which managed a brief spell in positive territory around mid-morning, closed with a marginal loss of 28.41 points or 0.2 percent at 14,944.35.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index tumbled by 2.1 percent and Hong Kong’s Hang Seng Index plunged by 3.7 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.7 percent, the French CAC 40 Index is down by 1.3 percent and the German DAX Index is down by 1.1 percent.

In commodities trading, crude oil futures are tumbling $1.62 to $70.78 a barrel after slipping $0.28 to $72.40 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,206.10, down $4.10 compared to the previous session’s close of $2,030.20. On Tuesday, gold slumped $21.40.

On the currency front, the U.S. dollar is trading at 147.92 yen compared to the 147.19 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0860 compared to yesterday’s $1.0875.

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