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Stocks May Regain Ground In Early Trading - U.S. Commentary


Following the weakness seen in the previous session, stocks may move back to the upside in early trading on Wednesday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 111 points.

The markets may benefit from bargain hunting following the pullback on Tuesday, which saw the Dow slump by nearly 300 points.

Notable strength seen in the overseas markets on the day may also generate some early buying interest on Wall Street.

Trade concerns may continue to weigh on the markets, however, as traders worry about an escalating trade dispute between the U.S. and China.

President Donald Trump has directed U.S. Trade Representative Robert Lighthizer to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent.

Trump said the tariffs will go into effect if China refuses to change its unfair trade practices and insists on going forward with recently announced tariffs.

The president threatened to pursue additional tariffs on another $200 billion worth of goods if China increases its tariffs yet again.

Despite the threat from Trump, China vowed to retaliate with "strong" countermeasures if the U.S. goes ahead with the new tariffs.

Shares of Walgreens Boots Alliance (WBA) and General Electric (GE) are likely to be in focus on news the drugstore chain operator will replace the industrial conglomerate in the Dow Jones Industrial Average.

Shortly after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of May.

Existing home sales are expected to climb to an annual rate of 5.52 million in May after tumbling by 2.5 percent to a rate of 5.46 million in April

After showing a significant move to the downside early in the session, stocks regained some ground over the course of the trading day on Tuesday. The major averages climbed well off their worst levels of the day but still closed in negative territory.

The major averages all finished the session in the red, although the Dow underperformed its counterparts by a wide margin. The Dow tumbled 287.26 points or 1.2 percent to 24,700.21, while the Nasdaq fell 21.44 points or 0.3 percent to 7,725.58 and the S&P 500 slid 11.18 points or 0.4 percent to 2,762.57.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.2 percent, and Hong Kong's Hang Seng Index advanced by 0.8 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has surged up by 1 percent, the German DAX Index and the French CAC 40 Index are both up by 0.4 percent.

In commodities trading, crude oil futures are climbing $0.66 to $65.73 a barrel after sliding $0.78 to $65.07 a barrel on Tuesday. Meanwhile, after slipping $1.50 to $1,278.60 an ounce in the previous session, gold futures are falling $2.60 to $1,276 an ounce.

On the currency front, the U.S. dollar is trading at 110.01 yen compared to the 110.06 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1580 compared to yesterday's $1.1590.

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