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U.S. Stocks May Move Back To The Upside Ahead Of Fed Announcement

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Stocks may move to the upside in early trading on Wednesday, regaining ground following the sharp pullback seen in the previous session. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 116 points.

Bargain hunting may contribute to early strength on Wall Street, as traders pick up stocks at reduced levels after yesterday's weakness dragged the major averages down to two-month closing lows.

Early buying interest is likely to be somewhat subdued, however, as traders look ahead to the Federal Reserve's monetary policy decision this afternoon.

With the announcement looming, CME Group's FedWatch Tool is currently indicating an 82.0 percent chance of a 75 basis points rate hike and an 18.0 percent chance of a 100 basis point rate hike.

The size of the rate increase is likely to be in the spotlight, although traders are also likely to pay close attention to the accompanying statement for clues about the outlook for future rate hikes.

Shortly after the start of trading, the National Association of Realtors is scheduled to release its report on existing home sales in the month of August.

Existing home sales are expected to slump by 2.3 percent to an annual rate of 4.70 million in August after plunging by 5.9 percent to a rate of 4.81 million in July.

Following the advance seen going into the close of Monday's session, stocks showed a notable move back to the downside during trading on Tuesday. With the pullback on the day, the major averages fell to their lowest closing levels in two months.

The major averages climbed off their lows of the session in late-day trading but remained firmly negative. The Dow slid 313.45 points or 1.0 percent to 30,706.23, the Nasdaq slumped 109.97 points or 1.0 percent to 11,425.05 and the S&P 500 dove 43.96 points or 1.1 percent to 3,855.93.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while Hong Kong's Hang Seng Index plunged by 1.8 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index has edged down by 0.1 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.6 percent.

In commodities trading, crude oil futures are jumping $1.49 to $85.43 a barrel after slumping $1.42 to $83.94 barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,683.60, up $12.50 compared to the previous session's close of $1,671.10. On Tuesday, gold fell $7.10.

On the currency front, the U.S. dollar is trading at 144.01 yen compared to the 143.75 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $0.9906 compared to yesterday's $0.9971.

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