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U.S. Stocks Likely To Come Under Pressure In Early Trading

wallstreet oct19 27jan21 lt

Stocks are likely to come under pressure in early trading on Wednesday, adding to the modest losses posted in the previous session. The major index futures are currently pointing to a significantly lower open for the markets, with the Dow futures down by 333 points.

Concerns about the impact of new, more contagious coronavirus strains may weigh on the markets along with uncertainty about the prospects for a new relief package under President Joe Biden.

Negative sentiment may also be generated in reaction to comments from Russian President Vladimir Putin, who warned of a collapse of global development that might result in a "fight of all against all."

Putin claimed during a virtual meeting of the World Economic Forum that the coronavirus pandemic has aggravated existing global tensions, comparing the current state of affairs to the situation preceding World War II.

"Of course, nowadays such a heated conflict is not possible. I hope that it's not possible in principle, because it would mean the end of our civilization," Putin said.

He added, "But I would like to reiterate, that the situation might develop unpredictably and uncontrollably if we will sit on our hands doing nothing to avoid it."

The downward momentum on Wall Street may also reflect apprehension ahead of the Federal Reserve's monetary policy announcement this afternoon.

The Fed is widely expected to leave interest rates unchanged, but traders will be closely watching the central bank's comments about its bond purchasing program, hoping they avoid any mention of "tapering."

Concerns about recent speculative trading by retail investors may also weigh on Wall Street amid continued spikes by heavily shorted stocks like GameStop (GME) and AMC Entertainment (AMC).

On the earnings front, shares of Boeing (BA) are likely to come under pressure after the aerospace giant reported a steep fourth quarter loss and further delayed its new 777x jet.

Telecom giant AT&T (T) is also seeing some pre-market weakness after reporting better than expected fourth quarter results but providing disappointing revenue guidance for 2021.

Meanwhile, shares of Microsoft (MSFT) are moving notably higher in pre-market trading after the software giant reported fiscal second quarter results that beat expectations on both the top and bottom lines.

In U.S. economic news, a report released by the Commerce Department showed new orders for manufactured durable goods rose by much less than expected in the month of December.

The Commerce Department said durable goods orders edged up by 0.2 percent in December after surging by an upwardly revised 1.2 percent in November.

Economists had expected durable goods orders to increase by 0.9 percent compared to the 1.0 percent jump that had been reported for the previous month.

Excluding a pullback in orders for transportation equipment, durable goods orders climbed by 0.7 percent in December after advancing by 0.8 percent in November. Ex-transportation orders were expected to rise by 0.5 percent.

Following the mixed performance seen on Monday, stocks showed a lack of direction over the course of the trading day on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day modestly lower. The Dow slipped 22.96 points or 0.1 percent to 30,937.04, the Nasdaq edged down 9.93 points or 0.1 percent to 13,626.07 and the S&P 500 dipped 5.74 points or 0.2 percent to 3,849.62.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index fell by 0.3 percent.

Meanwhile, the major European markets have moved sharply lower on the day. While the German DAX Index has plunged by 2.1 percent, the French CAC 40 Index is down by 1.8 percent and the U.K.'s FTSE 100 Index is down by 1.5 percent.

In commodities trading, crude oil futures are edging down $0.08 to $52.53 a barrel after dipping $0.16 to $52.61 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,838.90, down $12 compared to the previous session's close of $1,850.90. On Tuesday, gold fell $4.30.

On the currency front, the U.S. dollar is trading at 103.98 yen compared to the 103.62 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.2108 compared to yesterday's $1.2160.

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