Futures Pointing To Initial Pullback On Wall Street

The major U.S. index futures are currently pointing to a modestly lower open on Wednesday, with stocks likely to give back ground following the upward seen in the previous session.

Profit taking may contribute to initial weakness on Wall Street, as some traders look to cash in on the recent strength in the markets.

Following the rally seen last Friday, stocks have seen further upside to start the week, with the Dow and the S&P 500 reaching new record highs.

Overall trading activity may be somewhat subdued, however, as traders continue to await the next catalyst for the markets following the Federal Reserve’s interest rate cut last week.

In the coming days, trading may be impacted by reaction to reports on weekly jobless claims, durable goods orders and personal income and spending.

U.S. stocks closed higher on Tuesday after a somewhat choppy ride, and the S&P 500 hit a fresh record high, as investors made largely cautious moves while awaiting more data for directional cues.

The Dow, which kept moving in and out of positive territory, ended with a gain of 83.57 points or 0.2 percent at 42,208.22, after hitting a fresh record intraday high of 42,208.22.

The S&P 500 closed up 14.36 points or 0.3 percent at 5,732.93, slightly off the all-time high of 5,735.32, and the Nasdaq climbed 100.25 points or 0.6 percent to 18,074.52.

Nvidia Corporation shares climbed about 4 percent. Caterpillar also gained about 4 percent, and Uber Technologies ended up 3.7 percent.

Tesla, Home Depot, Netflix, Salesforce, AMD, Comcast Corporation and Nike gained 1 to 3 percent.

Visa Inc. shares declined sharply after U.S. Department of Justice filed an antitrust lawsuit against the payment company alleging that some of its debit card practices are anticompetitive.

Starbucks, Citigroup, Amgen, Wells Fargo, Abott Laboratories, PepsiCo, Bank of America, Costco, Mastercard and Microsoft Corporation closed notably lower.

On the economic front, consumer confidence in the U.S. has seen a notable deterioration in the month of September, according to a report released by the Conference Board on Tuesday.

The Conference Board said it consumer confidence index tumbled to 98.7 in September from an upwardly revised 105.6 in August. Economists had expected the index to edge down to 103.0 from the 103.3 originally reported for the previous month.

The S&P CoreLogic Case-Shiller 20-city home price index in the U.S. rose by 5.9 percent from the previous year in July of 2024, slowing from the 6.5 percent increase during the previous month.

Commodity, Currency Markets

Crude oil futures are tumbling $1.47 to $70.09 a barrel after jumping $1.19 to $71.56 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,683.20, up $6.20 compared to the previous session’s close of $2,677. On Tuesday, gold surged $24.50.

On the currency front, the U.S. dollar is trading at 144.26 yen compared to the 143.21 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1194 compared to yesterday’s $1.1180.

Asia

Asian stocks were muted on Wednesday even as Chinese and Hong Kong markets posted strong gains to extend the previous session’s rally after China’s central bank slashed its medium-term lending facility from 2.3 percent to 2.0 percent, marking the largest reduction of interest rates for one-year loans to financial institutions in history.

The dollar hit a new one-month low versus the euro and a 2 1/2-year trough to sterling as weak U.S. data bolstered the case for deeper rate cuts.

Gold held near record levels amid increased bets for another super-sized interest rate cut at the Federal Reserve’s November meeting.

Crude oil retreated from a multi-week high despite industry data pointing to a larger-than-expected crude draw.

China’s Shanghai Composite Index surged 1.2 percent to 2,896.31, extending its stimulus-fueled rally to a second day running. Hong Kong’s Hang Seng Index rose 0.7 percent to 19,129.10.

China’s yuan hit a fresh 16-month high, briefly crossing the key 7-per-dollar level in offshore trading, following interest rate cuts and new measures from the country’s central bank.

Japanese markets fell slightly in choppy trading as the yen held steady after slipping to a nearly three-week low against the dollar on Tuesday amid signs the Bank of Japan is not hurrying to raise interest rates further.

The Nikkei 225 Index slipped 0.2 percent to 37,870.26, while the broader Topix Index settled 0.2 percent lower at 2,650.50.

Data showed earlier in the day that a leading indicator of Japan’s service-sector inflation held steady at 2.7 percent in August.

Seoul stocks fell sharply to snap a six-day winning streak. The Kospi tumbled 1.3 percent to 2,596.32 ahead of the launch of a new stock index next week.

Investors also reacted to central bank data showing that consumer morale in the country decreased to its lowest level since May in September due to a delay in the recovery of domestic demand.

Australian markets ended slightly lower after data showed consumer price inflation slowed to a three-year low in August, but core inflation remained sticky and above the RBA’s target range.

The benchmark S&P/ASX 200 Index dipped 0.2 percent to 8,126.40, dragged down by banks. The broader All Ordinaries Index ended down 0.2 percent at 8,372.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index fell 0.7 percent to 12,224.53.

Europe

European stocks were subdued on Wednesday as investors reassessed the ability of China’s stimulus to boost demand.

Earlier today, China’s central bank lowered the cost of its medium-term loans to banks in a move consistent with other broad policy to shore up growth in the world’s second-largest economy.

In addition, Sweden’s central bank has cut its key interest rate by a quarter point and said it envisioned another two cuts this year.

In economic news, French consumer sentiment strengthened to the highest level in more than two years in September, survey results from the statistical office INSEE showed.

The consumer confidence index rose to 95 from revised 93 in August. The score was forecast to remain unchanged at August’s initially estimated value of 92.0.

This was the highest score since February 2022. However, the reading was below its long-term average of 100.

While the U.K.’s FTSE 100 Index is up by 0.3 percent, the French CAC 40 Index and the German DAX Index are both down by 0.2 percent.

In corporate news, UniCredit shares have rallied. The Italian lender said that it has initiated the process of internalizing its life bancassurance business in Italy by terminating its existing agreements with CNP Assurances S.A. and Allianz S.p.A.

Valmet Oyj has also moved sharply higher after the Finnish engineering company bagged an order worth more than 1 billion euros in Brazil.

Meanwhile, SAP has tumbled after reports that the German software developer is being probed by U.S. officials for alleged price-fixing.

Orange S.A. shares have also fallen in Paris. The telecom major has decided to voluntarily delist its American Depositary Shares from the New York Stock Exchange and with the U.S. Securities and Exchange Commission or SEC.

British property website Rightmove has also dipped after its board unanimously turned down a revised takeover offer from Australia’s REA Group, saying the increased proposal continues to be unattractive and materially undervalues the company and its future prospects.

U.S. Economic Reports

The Commerce Department is scheduled to release its report on new home sales in the month of August at 10 am ET. New home sales are expected to decrease to an annual rate of 700,000 in August after surging to a rate of 739,000 in July.

At 10:30 am ET, the Energy Information Administration is due to release its report on crude oil inventories in the week ended September 20th. Crude oil inventories are expected to dip by 1.2 million barrels after falling by 1.6 million barrels in the previous week.

The Treasury Department is scheduled to announce the results of this month’s auction of $70 billion worth of five-year notes at 1 pm ET.

At 4 pm ET, Federal Reserve Board Governor Adriana Kugler is due to speak on the economic outlook before an event hosted by Harvard Kennedy School.