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U.S. Stocks May Lack Direction Ahead Of Fed Minutes

wallstreet july23 05jan22 lt

Following the mixed performance seen in the previous session, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 2 points.

Traders may be reluctant to make significant moves ahead of this afternoon's release of the minutes of the Federal Reserve's latest monetary policy meeting.

After the December meeting, the Fed announced its widely expected decision to accelerate the pace of reductions to its asset purchases program.

The Fed minutes may shed additional light on the outlook for monetary policy, with the central bank's latest projections forecasting as many three interest rate hikes in 2022.

Concerns about higher interest rates may continue to weigh on tech stocks, which pulled back sharply in the previous session.

Meanwhile, the futures did not show much reaction to a report from payroll processor ADP showing stronger than expected private sector job growth in the month of December.

ADP said private sector employment spiked by 807,000 jobs in December after jumping by a revised 505,000 jobs in November.

Economists had expected private sector employment to increase by 400,000 jobs compared to the addition of 534,000 jobs originally reported for the previous month.

"December's job market strengthened as the fallout from the Delta variant faded and Omicron's impact had yet to be seen," said ADP chief economist Nela Richardson.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Economists currently expect employment to jump by 400,000 jobs in December after rising by 210,000 jobs in November. The unemployment rate is expected to edge down to 4.1 percent from 4.2 percent.

After moving notably higher over the course of Monday's session, the major U.S. stock indexes turned a starkly mixed performance during trading on Tuesday. While the Dow climbed to a new record closing high, the tech-heavy Nasdaq showed a substantial pullback.

The Dow ended the session off its best levels of the day but still closed up 214.59 points or 0.6 percent at 36,799.65. Meanwhile, the Nasdaq tumbled 210.08 points or 1.3 percent to 15,622.72 and the S&P 500 edged down 3.02 points or 0.1 percent to 4,793.54 after reaching a record intraday high.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday, although Japan's Nikkei 225 Index bucked the downtrend and inched up by 1 percent. China's Shanghai Composite Index slumped by 1 percent and Hong Kong's Hang Seng Index tumbled by 1.6 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the U.K.'s FTSE 100 Index has edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index are both up by 0.7 percent.

In commodities trading, crude oil futures are rising $0.60 to $77.59 a barrel after jumping $0.91 to $76.99 a barrel a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,822.40, up $7.80 compared to the previous session's close of $1,814.60. On Tuesday, gold climbed $14.50.

On the currency front, the U.S. dollar is trading at 115.81 yen compared to the 116.16 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1313 compared to yesterday's $1.1287.

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