U.S. Stocks May Give Back Ground In Early Trading

Stocks are likely to come under pressure in early trading on Wednesday, giving back ground after trending higher over the past few sessions. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 0.9 percent.

Tech stocks may lead an early pullback on Wall Street after a report from Bloomberg said President Joe Biden’s administration is considering tougher trade rules against companies in its chip crackdown on China.

Bloomberg said the administration has told allies that it’s considering using the most severe trade restrictions available if companies continue giving China access to advanced semiconductor technology.

Citing people familiar with recent discussions, Bloomberg said the U.S. is mulling whether to impose a measure called the foreign direct product rule, which lets the country impose controls on foreign-made products that use even the tiniest amount of American technology.

The downward momentum on Wall Street also comes after former President Donald Trump suggested Taiwan should pay the U.S. for defense, claiming the country took “about 100%” of America’s chip business.

In U.S. economic news, the Commerce Department released a report showing a significant rebound by new residential construction in the U.S. in the month of June.

The report said housing starts shot up by 3.0 percent to an annual rate of 1.353 million in June after plunging by 4.6 percent to a revised rate of 1.314 million in May.

Economists had expected housing starts to jump by 2.6 percent to a rate of 1.310 million from the 1.277 million originally reported for the previous month.

The Commerce Department said building permits also surged by 3.4 percent to an annual rate of 1.446 million in June after tumbling by 2.8 percent to a revised rate of 1.399 million in May.

Building permits, an indicator of future housing demand, were expected to rise by 0.3 percent to an annual rate of 1.390 million from the 1.386 million originally reported for the previous month.

Shortly before the start of trading, the Federal Reserve is due to release its report on industrial production in the month of June. Industrial production is expected to rise by 0.3 percent in June after jumping by 0.9 percent in May.

Extending the upward move seen over the two preceding sessions, stocks moved mostly higher during trading on Tuesday. The Dow led the charge, surging to a new record closing high.

The Dow jumped 742.76 points or 1.9 percent to 40,954.48, the S&P 500 climbed 35.98 points or 0.6 percent to a new record closing high of 5,667.20 and the Nasdaq rose 36.77 points or 0.2 percent to 18,509.34.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while Hong Kong’s Hang Seng Index inched up by 0.1 percent.

Meanwhile, European stocks have moved mostly lower on the day. The French CAC 40 Index and the German DAX Index are both down by 0.5 percent, although the U.K.’s FTSE 100 Index has bucked the downtrend and crept up by 0.1 percent.

In commodities trading, crude oil futures are climbing $0.66 to $81.42 a barrel after slumping $1.15 to $80.76 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,479.30, up $11.50 compared to the previous session’s close of $2,467.80. On Tuesday, gold soared $38.90.

On the currency front, the U.S. dollar is trading at 156.64 yen compared to the 158.35 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0939 compared to yesterday’s $1.0899.

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