After moving sharply higher over the course of the previous session, stocks could see some further upside in early trading on Wednesday. The major index futures are currently pointing to a modestly higher open for the markets, with the Dow futures up by 19 points.
Stocks may continue to benefit from optimism about the likelihood of further stimulus from the Federal Reserve, which is due to release its monetary policy statement later this afternoon.
In light of a recent batch of disappointing U.S. economic data as well as continued concerns about the ongoing financial crisis in Europe, the Fed is widely expected to announce further measures to stimulate the sluggish economy.
Many analysts expect the Fed to announce an extension of "Operation Twist," which involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower.
Peter Boockvar, managing director at Miller Tabak, said, "Putting aside what they should do, what they will do is something, because the last thing they did is expiring."
"If twisting is all we get, if at all, stocks are a sell on the news, because I believe the only thing keeping this rally alive are the hopes and wishes for bailout/easing help," he added. "It is certainly not on the outlook for global economic growth."
Following the release of the statement, the Fed's revised economic forecasts may attract some attention along with Chairman Ben Bernanke's press conference.
In corporate news, shares of Procter & Gamble (PG) are likely to be in focus after the consumer products giant warned of weaker than previously expected fourth quarter results.
P&G attributed the downwardly revised guidance to slower than expected market growth rates, market share softness in developed regions and negative impacts from foreign exchange rate changes.
Adobe Systems (ADBE) may move to the downside after the software developer reported better than expected second quarter results but provided disappointing guidance.
With traders expressing optimism about further stimulus from the Fed, stocks moved sharply higher during trading on Tuesday. The strong gains extended the upward move seen over the past two weeks.
The major averages gave back some ground in the latter part of the trading day but still closed firmly in positive territory. The Dow advanced 95.51 points or 0.8 percent to 12,837.33, the Nasdaq jumped 34.43 points or 1.2 percent to 2,929.76 and the S&P 500 climbed 13.20 points or 1 percent to 1,357.98.
The gains lifted the major averages to their best closing levels in over a month, although they remain well off their spring highs.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, benefiting from the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 1.1 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index has edged down by 0.1 percent, the German DAX Index is up by 0.2 percent and the U.K.'s FTSE 100 Index is up by 0.5 percent.
In commodities trading, crude oil futures are inching up $0.05 to $84.08 a barrel after ending Tuesday's trading up $0.76 at $84.03 a barrel. An ounce of gold is currently valued at $1,606.10, down $17.10 from the previous session's close of $1,623.20. In the previous session, gold fell $3.80.
On the currency front, the U.S. dollar is trading at 79.05 yen compared to the 78.95 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.2706 compared to yesterday's $1.2685.
by RTT Staff Writer
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