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

wallstreet sep4 23nov22 lt

Following the rally 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 down by just 3 points.

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

The Fed's early November meeting was conducted before the recent release of tamer-than-expected inflation data, but traders are still likely to look to the minutes for confirmation the central bank plans to slow the pace of interest rate hikes as soon as next month.

The Thanksgiving Day holiday on Thursday may also contribute to choppy trading, as some traders are likely to be away from their desks for travel.

Meanwhile, trading may be impacted by reaction to a slew of U.S. economic data, including recently released reports on initial jobless claims and durable goods orders.

The Labor Department released a report showing first-time claims for U.S. unemployment benefits increased by more than expected in the week ended November 19th.

The report said initial jobless claims rose to 240,000, an increase of 17,000 from the previous week's revised level of 223,000.

Economists had expected jobless claims to inch up to 225,000 from the 222,000 originally reported for the previous week.

With the bigger than expected increase, jobless claims reached their highest level since hitting 245,000 in the week ended August 13th.

A separate report released by the Commerce Department showed new orders for U.S. manufactured durable goods jumped by much more than expected in the month of October.

The report said durable goods orders shot up by 1.0 percent in October after rising by a downwardly revised 0.3 percent in September.

Economists had expected durable goods orders to climb by 0.4 percent, matching the increase that had been reported for the previous month.

Excluding a surge in orders for transportation equipment, durable goods orders rose by 0.5 percent in October after slumping by 0.9 percent in September. Ex-transportation orders were expected to be unchanged.

Not long after the start of trading, the Commerce Department is scheduled to release its report on new home sales in the month of October. New home sales are expected to plunge by 5.5 percent to an annual rate of 570,000.

The University of Michigan is also due to release its revised reading on consumer sentiment in the month of November. The consumer sentiment index is expected to be unrevised at 54.7.

After ending Monday's trading mostly lower, stocks showed a strong move back to the upside during trading on Tuesday. With the upward move, the S&P 500 closed above 4,000 for the first time since September, while the Dow reached a three-month closing high.

The major averages saw further upside going into the close, ending the day just off their highs of the session. The Dow jumped 397.82 points or 1.2 percent to 34,098.10, the Nasdaq surged 149.90 points or 1.4 percent to 11,174.41 and the S&P 500 shot up 53.64 points or 1.4 percent to 4,003.58.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index rose by 0.3 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 is down by 0.2 percent, the French CAC 40 Index is nearly unchanged and the U.K.'s FTSE 100 Index is up by 0.2 percent.

In commodities trading, crude oil futures are plunging $2.43 to $78.52 a barrel after climbing $0.91 to $80.95 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,736.80, down $3.10 compared to the previous session's close of $1,739.90. On Tuesday, gold inched up $0.30.

On the currency front, the U.S. dollar is trading at 141.13 yen compared to the 141.23 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0321 compared to yesterday's $1.0304.

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