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


Following the weakness seen in the previous session, stocks may see further downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 169 points.

Disappointing earnings news from Target (TGT) may weigh on the markets, as the discount retailer is moving significantly lower in pre-market trading.

The drop by shares of Target comes after the company reported first quarter results that missed analyst estimates on both the top and bottom lines.

Home improvement retailer Lowe's (LOW) also reported weaker than expected first quarter results but provided upbeat guidance.

Traders may also continue to react to comments from President Donald Trump expressing some dissatisfaction with trade talks with China.

"Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion," Trump said in a post on Twitter.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on new home sales in the month of April. New home sales are expected to drop to an annual rate of 679,000.

The Federal Reserve is also due to release the minutes of its latest monetary policy meeting later in the day. The minutes may she additional light on the outlook for interest rates.

U.S. stocks fell on Tuesday, unable to sustain positive momentum from the previous session despite overtures from China.

China will cut the import tariffs it charges on cars to 15 percent, which will give a boost to foreign automakers in the world's largest market, especially for U.S. automakers. Still, Trump says he's "not really" pleased with China's trade talks so far.

The Dow Jones Industrial Average closed 178.88 points, or 0.7 percent lower at 24,834.65. The S&P 500 Index fell 8.54 points, or 0.3 percent to 2,724.46 and the Nasdaq Composite edged down 15.58 points or 0.2 percent to 7,378.46.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.2 percent, while Hong Kong's Hang Seng Index plunged by 1.8 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.6 percent, the French CAC 40 Index is down by 1.4 percent and the German DAX Index is down by 1.7 percent.

In commodities trading, crude oil futures are falling $0.28 to $71.92 a barrel after slipping $0.15 to $72.20 a barrel on Tuesday. Meanwhile, after rising $1.10 to $1,292 an ounce in the previous session, gold futures are inching up $1.20 to $1,293.20 an ounce.

On the currency front, the U.S. dollar is trading at 109.94 yen compared to the 110.90 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1708 compared to yesterday's $1.1779.

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