U.S. Stocks May Continue To Experience Choppy Trading

Following the lackluster performance seen in the previous session, stocks may continue to experience choppy trading on Wednesday. The major index futures are currently pointing to a slightly lower open for the markets, with the Dow futures down by 39 points.

Traders may remain reluctant to make significant moves as the wait for more clarity about the near-term outlook for the markets.

Strong economic data has helped lift stocks to record highs in recent sessions, but traders may be worried the markets are becoming overbought.

In his annual letter to shareholders, JPMorgan Chase chairman and CEO Jamie Dimon acknowledged valuations are “quite high” but noted a multi-year booming economy could justify current prices.

“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” Dimon wrote. “This boom could easily run into 2023 because all the spending could extend well into 2023.

He added, “Equity markets look ahead, and they may very well be pricing in not only a booming economy but also the technical factor that lots of the excess liquidity will find its way into stocks.”

Traders may also be looking ahead to the release of the minutes of the Federal Reserve’s latest monetary policy meeting, which could shed additional light on the outlook for interest rates.

Estimates provided after the meeting show Fed officials expect rates to remain at near-zero levels through 2023, but the fed funds futures market is predicting a rate hike as early as December 2022 following recent upbeat economic data.

On the U.S. economic front, the Commerce Department released a report showing the U.S. trade deficit widened more than expected in the month of February.

The Commerce Department said the trade deficit widened to $71.1 billion in February from a revised $67.8 billion in January.

Economists had expected the deficit to widen to $70.5 billion from the $68.2 billion originally reported for the previous month.

The wider deficit came as the value of exports tumbled by 2.6 percent to $187.3 billion, while the value of imports slid by 0.7 percent to $258.3 billion.

Following the rally seen during trading on Monday, stocks showed a lack of direction over the course of the trading day on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line before eventually closing slightly lower.

While the Dow slipped 96.95 points or 0.3 percent to 33,430.24, the Nasdaq and the S&P 500 closed just below the unchanged line. The Nasdaq edged down 7.21 points or 0.1 percent to 13,698.38 and the S&P 500 dipped 3.97 points or 0.1 percent to 4,073.94.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index has advanced by 0.7 percent, the French CAC 40 Index and the German DAX Index are both down by 0.2 percent.

In commodities trading, crude oil futures are rising $0.40 to $59.73 a barrel after climbing $0.68 to $59.33 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,736.10, down $6.90 compared to the previous session’s close of $1,743. On Tuesday, gold advanced $14.20.

On the currency front, the U.S. dollar is trading at 109.85 yen compared to the 109.75 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1881 compared to yesterday’s $1.1876.