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Stocks Could See Further Downside In Early Trading - U.S. Commentary


Stocks may see further downside in early trading on Wednesday following the weakness seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 51 points.

Middle East concerns as well as worries over a possible government shutdown may lead traders to move their money into safer havens.

Selling pressure may be somewhat subdued, however, with a report from payroll processor ADP showing a slightly bigger than expected increase in private sector employment generating some positive sentiment.

ADP said private sector employment climbed by 190,000 jobs in November after surging up by 235,000 jobs in October. Economists had expected an increase of about 185,000 jobs.

A separate report from the Labor Department showed a significant increase in labor productivity in the third quarter.

The report said labor productivity jumped by 3.0 percent in the third quarter, unchanged from the preliminary estimate. Economists had expected the increase in productivity to be upwardly revised to 3.3 percent.

Meanwhile, the Labor Department said unit labor costs fell by a revised 0.2 percent in the third quarter compared to the previously reported 0.5 percent increase. Costs had been expected to rise by a revised 0.2 percent.

After seeing strength for much of the session on Tuesday, stocks pulled back late in the day to close moderately lower. The Dow pulled back off the record closing high set on Monday.

The Dow fell 109.41 points or 0.5 percent to 24,180.64, the Nasdaq edged down 13.15 points or 0.2 percent to 6,762.21 and the S&P 500 dipped 9.87 points or 0.3 percent to 2,629.57.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 2 percent, while Hong Kong's Hang Seng Index plunged by 2.1 percent.

European stocks have also come under pressure on the day, with the French CAC 40 Index sliding by 0.6 percent and the German DAX Index tumbling by 1.1 percent. However, the U.K.'s FTSE 100 Index has bucked the downtrend and inched up by 0.1 percent.

In commodities trading, crude oil futures are sliding $0.81 to $56.81 a barrel after inching up $0.15 to $57.62 a barrel on Tuesday. Gold futures, which slumped $12.80 to $1,264.90 an ounce in the previous session, are rising $3.60 to $1,268.50 an ounce.

On the currency front, the U.S. dollar is trading at 112.07 yen compared to the 112.60 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1818 compared to yesterday's $1.1826.

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