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Renewed Optimism About Trade Talks May Generate Early Buying Interest

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Following the sell-off seen late 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 177 points.

Renewed optimism about upcoming U.S.-China trade talks may generate initial buying interest after a report from Bloomberg News said China is still open to reaching a partial trade deal with the U.S.

An official with direct knowledge of the talks told Bloomberg that negotiators aren't optimistic about securing a broad agreement to end the U.S.-China war but said China would accept a limited deal as long as President Donald Trump does not impose any more tariffs.

In return, the official told Bloomberg, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points.

The positive reaction to the report reflects the intense focus on the next round of high-level trade talks set to begin on Thursday.

News the Trump administration imposed visa restrictions on Chinese officials over abuses of Muslim minorities contributed to the late-day sell-off on Tuesday amid concerns about the move's impact on the talks.

Optimism about the trade talks had already waned after a report from the South China Morning Post said China is subtly toning down expectations ahead of the negotiations.

News the U.S. has expanded its trade blacklist to include some of China's top artificial intelligence firms 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.

Nonetheless, overall trading activity may be somewhat subdued as traders look ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes may shed additional light on the Fed's decision to cut interest by 25 basis points in September and provide clues about the outlook for future rate cuts.

Not long after the start of trading, the Labor Department is scheduled to release its Job Openings and Labor Turnover Survey for the month of August. Job openings are expected to dip to 7.19 million in August after edging down to 7.22 million in July.

The Commerce Department is also due to release its report on wholesale inventories in the month of August. Wholesale inventories are expected to rise by 0.4 percent.

After coming under pressure early in the session, stocks regained some ground over the course of the trading day on Tuesday before pulling back sharply going into the close. The major averages ended the day firmly in negative territory.

The Nasdaq and the S&P 500 fell to new lows in late-day trading, while the Dow remained off its worst levels. The Dow still slumped 313.98 points or 1.2 percent to 26,164.04, the Nasdaq plunged 132.52 points or 1.7 percent to 7,823.78 and the S&P 500 tumbled 45.73 points or 1.6 percent to 2,893.06.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index fell by 0.6 percent and 0.8 percent, respectively, although China's Shanghai Composite Index bucked the downtrend and rose by 0.4 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index has jumped by 1.2 percent, the French CAC 40 Index is up by 0.8 percent and the U.K.'s FTSE 100 Index is up by 0.7 percent.

In commodities trading, crude oil futures are climbing $0.56 to $53.19 a barrel after slipping $0.12 to $52.63 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,512.20, up $8.30 compared to the previous session's close of $1,503.90. On Tuesday, gold edged down $0.50.

On the currency front, the U.S. dollar is trading at 107.33 yen compared to the 107.09 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0975 compared to yesterday's $1.0957.

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