Futures Pointing To Initial Rebound On Wall Street
Following the sell-off seen in the previous session, stocks may move back to the upside in early trading on Wednesday. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.2 percent.
Traders may look to pick up stocks at reduced levels on the heels of the steep drop seen on Tuesday, although trading activity may be subdued ahead of the Federal Reserve’s highly anticipated monetary policy announcement this afternoon.
With the Fed widely expected to raise interest rates by another 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for rates.
CME Group’s FedWatch Tool is currently indicating an 85.4 percent chance the Fed will raise rates by 25 basis points and an 82.39 percent chance the central bank will subsequently leave rates unchanged in June.
“The Federal Reserve will announce its latest interest rate decision later today and investors will be hanging on their every word in light of recent banking sector instability,” said Craig Erlam, Senior Market Analyst at OANDA.
He added, “Today was always likely to mark the end of the US central bank’s tightening cycle – not that it has explicitly signaled this – but we’ve now reached a stage in which every rate hike could have unwanted and unintended consequences.”
On the U.S. economic front, payroll processor ADP released a report showing private sector employment in the U.S. increased by much more than expected in the month of April.
ADP said private sector employment surged by 296,000 jobs in April after climbing by a revised 142,000 jobs in March.
Economists had expected private sector employment to advance by 148,000 jobs compared to the addition of 145,000 jobs originally reported for the previous month.
Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of April.
The ISM’s services PMI is expected to inch up to 51.8 in April from 51.2 in March, with a reading above 50 indicating growth in the sector.
Stocks moved sharply lower during trading on Tuesday, with the major averages adding to the slim losses posted during Monday’s session. The major averages all showed significant moves to the downside on the day.
The major averages recovered from their worst levels of the day but still posted steep losses. The Dow tumbled 367.17 points or 1.1 percent to 33,684.53, the Nasdaq slumped 132.09 points or 1.1 percent to 12,080.51 and the S&P 500 plunged 48.29 points or 1.2 percent to 4,119.58.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday, with markets in Japan and China closed for holidays. Hong Kong’s Hang Seng Index dove by 1.2 percent, while South Korea’s Kospi slid by 0.9 percent.
Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index is up by 0.8 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.
In commodities trading, crude oil futures are tumbling $2.06 to $69.60 a barrel after plummeting $4 to $71.66 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,022.30, down $1 compared to the previous session’s close of $2,023.30. On Tuesday, gold surged $31.10.
On the currency front, the U.S. dollar is trading at 135.53 yen compared to the 136.55 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1038 compared to yesterday’s $1.0999.
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