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Rising Treasury Yields May Weigh On Wall Street - U.S. Commentary


After closing mixed for two straight days, stocks are likely to move to the 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 81 points.

Stock futures fluctuated earlier in the day before coming under pressure following the release of the Labor Department's report on producer price inflation in the month of September.

The Labor Department said its producer price index for final demand increased by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to rise by 0.2 percent.

Excluding decreases in prices for food and energy, core producer prices still rose by 0.2 percent in September after slipping by 0.1 percent in August. The uptick in core prices also matched economist estimates.

The report said the annual rate of producer price growth slowed to 2.6 percent in September from 2.8 percent in August, while the annual rate of core producer price growth accelerated to 2.5 percent from 2.3 percent.

Treasury yields are moving higher following the release of the report, adding to recent concerns about the outlook for interest rates.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on wholesale inventories in the month of August. Wholesale inventories are expected to climb by 0.8 percent.

Traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes, which could have an impact on treasury yields.

Stocks fluctuated over the course of the trading day on Tuesday, extending the volatile performance seen in the previous session. The major averages spent the session bouncing back and forth across the unchanged line before closing mixed for the second straight day.

While the tech-heavy Nasdaq inched up 2.07 points or less than a tenth of a percent to 7,738.02, the Dow dipped 56.21 points or 0.2 percent to 26,430.57 and the S&P 500 edged down 4.09 points or 0.1 percent to 2,880.34.

In overseas trading, stock markets across the Asia-Pacific region saw modest strength during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.2 percent, while Hong Kong's Hang Seng Index crept up by 0.1 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the U.K.'s FTSE 100 Index has dipped by 0.2 percent, the German DAX Index is down by 0.9 percent and the French CAC 40 Index is down by 1 percent.

In commodities trading, crude oil futures are falling $0.43 to $74.54 a barrel after climbing $0.67 to $74.96 a barrel on Tuesday. Meanwhile, after rising $2.90 to $1,191.50 an ounce in the previous session, gold futures are slipping $1.90 to $1,189.60 an ounce.

On the currency front, the U.S. dollar is trading at 113.25 yen compared to the 112.96 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1494 compared to yesterday's $1.1491.

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