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U.S. Stocks May Open Lower Amid Waning Optimism About Trade Talks

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After ending the previous session modestly lower, stocks may see further downside in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 193 points.

Waning optimism about upcoming U.S.-China trade talks may generate early selling pressure after a report from the South China Morning Post said China is subtly toning down expectations ahead of this week's high-level negotiations.

The SCMP said Chinese Vice Premier Liu He is leading China's delegation to Washington but will not carry the title of "special envoy" for President Xi Jinping, an early indication that Liu has not been given any particular instructions from China's leader.

A source briefed on preparations for the trade talks also told the SCMP that the Chinese delegation may cut short their stay in Washington.

News that the U.S. has expanded its trade blacklist to include some of China's top artificial intelligence firms may also cast a shadow over the talks along with a Bloomberg report the White House is discussing blocking government pension funds from investing in China.

The negative sentiment may be partly offset by a Labor Department report showing an unexpected decrease in U.S. producer prices in the month of September.

The Labor Department said its producer price index for final demand fell by 0.3 percent in September after inching up by 0.1 percent in August. The drop surprised economists, who had expected another 0.1 percent uptick.

Excluding food and energy prices, core producer prices also slid by 0.3 percent in September after climbing by 0.3 percent in August. Economists had expected core prices to rise by 0.2 percent.

The tame inflation data may clear the way for the Federal Reserve to continue cutting interest rates amid signs of slowing economic growth.

Stocks showed a lack of direction over the course of the trading session on Monday, with the major averages bouncing back and forth across the unchanged line following the rally seen last Friday.

The major averages eventually ended the day in negative territory. The Dow fell 95.70 points or 0.4 percent to 26,478.02, the Nasdaq dipped 26.18 points or 0.3 percent to 7,956.29 and the S&P 500 slid 13.22 points or 0.5 percent to 2,938.79.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index jumped by 1 percent, while China's Shanghai Composite Index rose by 0.3 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.4 percent, the French CAC 40 Index and the German DAX Index are down by 1 percent and 1.1 percent, respectively.

In commodities trading, crude oil futures are sliding $0.70 to $52.05 a barrel after edging down $0.06 to $52.75 a barrel on Monday. Meanwhile, after falling $8.50 to $1,504.40 an ounce in the previous session, gold futures are rising $5.30 to $1,509.70 an ounce.

On the currency front, the U.S. dollar is trading at 106.93 yen compared to the 107.26 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0988 compared to yesterday's $1.0971.

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