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U.S. Stocks May Give Back Ground In Early Trading

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After ending yesterday's choppy trading session modestly higher, stocks may give back some ground in early trading on Wednesday. The major index futures are currently pointing to a slightly lower open for the markets, with the Dow futures down by 34 points.

Traders may remain reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon.

Economists widely expect the Fed to cut interest rates by another 25 basis points, with CME Group's FedWatch Tool currently indicating a 61.2 percent chance of a quarter point rate cut.

Traders are likely to pay closer attention to the Fed's accompanying statement, looking for clues about the likelihood of future rate cuts.

Ahead of the Fed announcement, the Commerce Department released a report showing a substantial rebound in new residential construction in the U.S. in the month of August.

The report said housing starts soared by 12.3 percent to an annual rate of 1.364 million in August after slumping by 1.5 percent to a revised rate of 1.215 million in July.

Economists had expected housing starts to surge up by 5 percent to a rate of 1.250 million from the 1.191 million originally reported for the previous month.

The Commerce Department said building permits also spiked by 7.7 percent to an annual rate of 1.419 million in August after jumping by 6.9 percent to a revised rate of 1.317 million in July.

Building permits, an indicator of future housing demand, had been expected to drop by 2.7 percent to a rate of 1.300 million from the 1.336 million originally reported for the previous month.

Stocks showed a lack of direction throughout much of the trading day on Tuesday as traders looked ahead to the Federal Reserve's monetary policy announcement. The major averages spent most of the session bouncing back and forth across the unchanged line.

The major averages moved to the upside going into the close, ending the day in positive territory. The Dow inched up 33.98 points or 0.1 percent to 27,110.80, the Nasdaq climbed 32.47 points or 0.4 percent to 8,186.02 and the S&P 500 rose 7.74 points or 0.3 percent to 3,005.70.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dipped by 0.2 percent, while China's Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets have all shown modest moves to the upside. While the U.K.'s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index and the German DAX Index are both up by 0.2 percent.

In commodities trading, crude oil futures are slumping $1 to $58.34 a barrel after plunging $3.56 to $59.34 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,511.80, down $1.60 compared to the previous session's close of $1,513.40. On Tuesday, gold rose $1.90.

On the currency front, the U.S. dollar is trading at 108.18 yen compared to the 108.13 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1055 compared to yesterday's $1.1073.

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