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

(RTTNews) - Stocks are likely to come under pressure in early trading on Wednesday, seeing further downside after ending the previous session mostly lower. The major index futures are pointing to a notably lower open for the markets, with the Dow futures down by 86 points.

The downward momentum for the markets is partly due to weakness overseas, where stocks came under pressure in reaction to the vague communique issued by China's Communist Party following the completion of the Third Plenum meeting.

A number of traders had been expecting China to reveal actionable financial reforms and were disappointed by the statement.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "The lack of details on a variety of issues sent Shanghai, Hong Kong, Australia, Jakarta, South Korea and Taiwan all down by more than 1% and is a factor in the weakness in Europe and in the S&P futures."

Traders also continue to express uncertainty about the outlook for the Federal Reserve's stimulus program amid another quiet day on the U.S. economic front.

Yesterday's comments from a pair of Fed officials added to the questions about the timing of the central bank's plans to begin scaling back its asset purchases.

Atlanta Fed President Dennis Lockhart told Bloomberg News the Fed's decision to begin tapering "could very well take place" at its meeting next month.

However, Lockhart also noted that he would like to see inflation move toward the central bank's 2 percent target before tapering begins.

Minneapolis Fed President Narayana Kocherlakota expressed support for maintaining the stimulus program in separate remarks, arguing that tapering too soon would be a drag on the economy.

Kocherlakota said the timing of the conversation about tapering was "puzzling" and suggested that the Fed should do "whatever it takes" to achieve its goals.

Nonetheless, trading activity may remain somewhat subdued as traders look ahead to tomorrow's reports on the U.S. trade balance, weekly jobless claims, and labor productivity as well as the hearing on Janet Yellen's nomination to be the next Fed Chairman.

After ending Monday's trading roughly flat, stocks turned in another lackluster performance during trading on Tuesday before closing mostly lower.

The major averages ended the session mixed, with the Nasdaq closing just above the unchanged line. While the Nasdaq inched up 0.13 points or less than a tenth of a percent to 3,919.92, the Dow edged down 32.43 points or 0.2 percent to 15,750.67 and the S&P 500 slipped 4.20 points or 0.2 percent to 1,767.69.

In overseas trading, stock markets across the Asia-Pacific region came under pressure on Wednesday. Hong Kong's Hang Seng Index and China's Shanghai Composite Index fell by 1.9 percent and 1.8 percent, respectively, while Japan's Nikkei 225 Index edged down by a more modest 0.2 percent.

The major European markets have also shown notable moves to the downside on the day. While the U.K.'s FTSE 100 Index has tumbled by 1.6 percent, the French CAC 40 Index and the German DAX Index are both down by 1.1 percent.

In commodities trading, crude oil futures are climbing $0.21 to $93.25 a barrel after plunging $2.10 to $93.04 a barrel on Tuesday. An ounce of gold is currently valued at $1,276.20, up $5 from the previous session's close of $1,271.20. On Tuesday, gold fell $9.90 an ounce.

On the currency front, the U.S. dollar is trading at 99.42 yen compared to the 99.64 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.3438 compared to yesterday's $1.3436.