U.S. Stocks May See Early Strength Ahead Of Fed Announcement
After moving higher in volatile trading over the two previous sessions, stocks may see further upside in early trading on Wednesday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.3 percent.
Traders may continue to pick up stocks at relatively reduced levels following the considerable weakness seen in the month of April.
During trading on Monday, the Nasdaq and the S&P 500 fell to multi-month lows before recovering to end the day in positive territory.
Trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement this afternoon.
With the Fed widely expected to raise interest rates by 50 basis points, traders are likely to look to the accompanying statement for clues about how aggressively the central bank plans to tighten monetary policy.
In U.S. economic news, a report released by payroll processor ADP showed U.S. private sector job growth slowed by more than expected in the month of April.
ADP said private sector employment increased by 247,000 jobs in April after jumping by an upwardly revised 479,000 jobs in March.
Economists had expected private sector employment to surge by 395,000 jobs compared to the addition of 455,000 jobs originally reported for the previous month.
The Commerce Department also released a report showing the U.S. trade deficit widened to a new record in the month of March.
The report showed the trade deficit widened to $109.8 billion in March from a revised $89.8 billion in February. Economists had expected the deficit to widen to $107.0 billion from the $89.2 billion originally reported for the previous month.
Not long 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 58.5 in April from 58.3 in March, with a reading above 50 indicating growth in the sector.
U.S. stocks closed slightly higher on Tuesday after a choppy session, with investors largely staying cautious and refraining from making significant moves ahead of the Federal Reserve’s monetary policy announcement.
The major averages all ended modestly higher despite staying quite sluggish for much of the day’s session.
The Dow ended with a gain of 67.29 points or 0.2 percent at 33,128.79 after moving between 32,914.75 and 33,341.58. The S&P 500 settled at 4,175.48, gaining 20.10 points or 0.5 percent, while the Nasdaq moved up 27.74 points or 0.2 percent to 12,563.76.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday, with markets in Japan and China still closed holidays. Hong Kong’s Hang Seng Index tumbled by 1.1 percent, while Australia’s S&P/ASX 200 Index edged down by 0.2 percent.
The major European markets have also moved to the downside on the day. While the German DAX Index is just below the unchanged line, the U.K.’s FTSE 100 Index is down by 0.3 percent and the French CAC 40 Index is down by 0.6 percent.
In commodities trading, crude oil futures are surging $3.88 to $106.29 a barrel after tumbling $2.76 to $102.41 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,865.20, down $5.40 compared to the previous session’s close of $1,870.60. On Tuesday, gold rose $7.
On the currency front, the U.S. dollar is trading at 129.80 yen compared to the 130.14 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0546 compared to yesterday’s $1.0521.
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