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

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Stocks are likely to move to the downside in early trading on Wednesday, giving back ground following the rally seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 41 points.

Lingering uncertainty about a potential U.S.-China trade deal may weigh on the markets, as new reports raised questions about the "phase one" deal announced by President Donald Trump last week.

A Wall Street Journal report noted questions remain about how much U.S. agricultural products China intends to buy and the time frame for the purchases, while a Bloomberg report said China wants tariffs rolled back before it moves forward.

Negative sentiment may also be generated in reaction to a Commerce Department report showing an unexpected decrease in U.S. retail sales in the month of September.

The Commerce Department said retail sales fell by 0.3 percent in September after climbing by an upwardly revised 0.6 percent in August.

The drop came as a surprise to economists, who had expected sales to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Excluding a notable pullback in auto sales, retail sales still edged down by 0.1 percent in September after rising by a revised 0.2 percent in August.

Economists had expected ex-auto sales to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

However, the weaker than expected data may reinforce expectations for another interest rate cut by the Federal Reserve at its next monetary policy meeting later this month.

The early selling pressure may also be offset by a positive reaction to the latest batch of earnings news, with Bank of America (BAC) moving notably higher in pre-market trading after reporting better than expected third quarter results.

Shortly after the start of trading, the National Association of Home Builders is due to release its report on homebuilder confidence in the month of October. The housing market index is expected to come in unchanged after inching up to 68 in September.

The Commerce Department is also scheduled to release its report on business inventories in the month of August. Business inventories are expected to rise by 0.2 percent.

Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts released shortly before the central bank makes it decision on monetary policy.

Following the lackluster performance seen on Monday, stocks moved sharply higher over the course of the trading day on Tuesday. With the jump, the major averages extended the strong upward move seen in the latter half of last week.

The major averages ended the day firmly in positive territory but off their highs of the session. The Dow jumped 237.44 points or 0.9 percent to 27,024.80, the Nasdaq soared 100.06 points or 1.2 percent to 8,148.71 and the S&P 500 surged up 29.53 points or 1 percent to 2,995.68.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 1.2 percent, while Hong Kong's Hang Seng Index climbed by 0.6 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index has edged up by 0.2 percent, the French CAC 40 Index is down by 0.1 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.

In commodities trading, crude oil futures are inching up $0.15 to $52.96 a barrel after sliding $0.78 to $52.81 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,491, up $7.50 compared to the previous session's close of $1,483.50. On Tuesday, gold tumbled $14.10.

On the currency front, the U.S. dollar is trading at 108.68 yen compared to the 108.86 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1039 compared to yesterday's $1.1033.

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