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Profit Taking May Contribute To Initial Weakness On Wall Street

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Following the mixed performance seen in the previous session, stocks are likely to move to the downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.8 percent.

A notable drop by shares of Target (TGT) may weigh on Wall Street, as the discount retailer is slumping by 2 percent in pre-market trading.

The pullback by Target comes after the company reported second quarter earnings that fell well short of analyst estimates, as it cut prices in an effort to reduce excess inventory.

On the other hand, shares of Lowe's (LOW) are likely to see initial strength after the home improvement retailer reported second quarter earnings that beat analyst estimates and forecast full-year earnings toward the top end of its outlook range.

Profit taking may also contribute to initial weakness on Wall Street, although recent efforts to cash in on the recent strength in the markets have largely faded over the course of the session.

Early trading may also be impacted by reaction to a Commerce Department report showing U.S. retail sales came in flat in July amid pullbacks in gas station and auto sales.

The Commerce Department said retail sales were virtually unchanged in July after climbing by a downwardly revised 0.8 percent in June.

Economists had expected retail sales to inch up by 0.1 percent compared to the 1.0 percent jump originally reported for the previous month.

Excluding the decrease in auto sales, retail sales rose by 0.4 percent in July following a downwardly revised 0.9 percent advance in June.

The increase came as a surprise to economists, who had expected ex-auto sales to edge down by 0.1 percent compared to the 1.0 percent surge originally reported for the previous month.

Shortly after the start of trading, the Commerce Department is due to release its report on business inventories in the month of June. Business inventories are expected to jump by 1.4 percent.

The Federal Reserve is scheduled to release the minutes of its latest monetary policy meeting later in the day, potentially shedding additional light on the outlook for interest rates.

While the Dow extended a recent upward trend during trading on Tuesday, closing higher for the fifth straight session, the tech-heavy Nasdaq and the S&P 500 fluctuated over the course of the trading day.

The major averages eventually ended the session mixed, with the Dow and the S&P 500 reaching their best closing levels in almost four months.

The Dow climbed 239.57 points or 0.7 percent to 34,152.01 and the S&P 500 edged up 8.06 points or 0.2 percent to 4,305.20. Meanwhile, the Nasdaq recovered from its early lows but still closed down 25.50 points or 0.2 percent at 13,102.55.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.2 percent, while China's Shanghai Composite Index rose by 0.5 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the German DAX Index has tumbled by 1.3 percent, the French CAC 40 Index is down by 0.5 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.

In commodities trading, crude oil futures are edging down $0.12 to $86.41 a barrel after plunging $2.88 to $86.53 barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,781.70, down $8 compared to the previous session's close of $1,789.70. On Tuesday, gold fell $8.40.

On the currency front, the U.S. dollar is trading at 135.18 yen compared to the 134.22 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0156 compared to yesterday's $1.0171.

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