Plus   Neg

Stocks May Move Back To The Downside In Early Trading - U.S. Commentary

After moving sharply higher over the course of the previous session, stocks are likely to give back some ground in early trading on Wednesday. The major index futures are currently pointing to a moderately lower open for the markets, with the Dow futures down by 44 points.

Profit taking is likely to contribute to the any early weakness on Wall Street, with some traders likely looking to cash in on Tuesday's gains amid lingering uncertainty about corporate earnings and the financial situation in Europe.

Further indications that the world's central banks are unlikely to engage in additional quantitative easing has also generated some negative sentiment, with the minutes of the latest Bank of England meeting showing that Adam Posen has abandoned his calls for an expansion in the bank's bond buying program.

A negative reaction to the latest batch of earnings news may also lead to some weakness in the markets, with shares of Intel (INTC) under pressure in pre-market trading after the semiconductor giant reported its first quarter results after the close of the previous session.

Intel reported first quarter earnings that exceeded analyst estimates on revenues that came in line with expectations. However, the company also provided disappointing gross margin guidance.

Shares of IBM (IBM) may also see early weakness after the tech giant reported better than expected than first quarter earnings but on weaker than expected sales.

Meanwhile, internet media giant Yahoo (YHOO) is moving higher in pre-market trading after reporting first quarter earnings and revenues that exceeded analyst estimates.

Berkshire Hathaway (BRKa) may also be in focus after CEO Warren Buffett said he has been diagnosed with stage I prostate cancer. However, Buffett told shareholders that his condition is "not remotely life threatening or even debilitating in any meaningful way."

With traders reacting positively to news out of Europe as well as the latest batch of quarterly results, stocks moved sharply higher during trading on Tuesday. The markets largely shrugged off some disappointing U.S. economic data.

The major averages moved roughly sideways going into the close, ending the session near their best levels of the day. The Dow jumped 194.13 points or 1.5 percent to 13,115.54, the Nasdaq soared 54.42 points or 1.8 percent to 3,042.82 and the S&P 500 surged up 21.21 points or 1.6 percent to 1,390.78.

In overseas trading, stock markets across the Asia-Pacific region moved to the upside on Wednesday, benefiting from the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 2.1 percent, while Hong Kong's Hang Seng Index advanced by 1.1 percent.

Meanwhile, the major European markets have come under pressure on the day. While the U.K.'s FTSE 100 Index is down by 0.3 percent, the German DAX Index is down by 1.1 percent and the French CAC 40 Index is down by 1.8 percent.

In commodities trading, crude oil futures are sliding $0.55 to $103.65 a barrel after advancing $1.27 to $104.20 a barrel on Tuesday. An ounce of gold is currently fetching $1,641.20, down $9.90 from the previous session's close of $1,651.10 an ounce. On Tuesday, gold rose $1.40.

Among currencies, the U.S. dollar is trading at 81.33 yen compared to the 80.84 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is currently valued at $1.3067 compared to yesterday's $1.3127.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

Follow RTT