Stocks May Extend Recent Downward Move In Early Trading - U.S. Commentary

(RTTNews) - After moving notably lower over the course of the previous session, stocks may see some further downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 63 points.

Geopolitical concerns are likely to weigh on the markets once again, as traders continue to worry about the conflict in Ukraine.

News of intense fighting in the eastern Ukrainian city of Donetsk is likely to weigh on the markets as government forces continue their offensive against pro-Russian separatists.

Polish Foreign Minister Radoslaw Sikorski has warned that Russia could launch an invasion if Ukrainian forces continue to have success in their fight against the rebels.

Russian troops are reportedly amassing on the border, and Sikorski told Polish news channel TVN24 the troops are poised to pressure or invade eastern Ukraine.

Sikorski's comments came on the heels of news that Russian President Vladimir Putin has ordered his government to draft a response to U.S. and European sanctions.

On the U.S. economic front, the Commerce Department recently released a report showing that the U.S. trade deficit unexpectedly narrowed in June amid a sharp drop in the value of imports.

The report said the U.S. trade deficit narrowed to $41.5 billion in June from a revised $44.7 billion in May. Economists had expected the deficit to widen to $45.0 billion from the $44.4 billion originally reported for the previous month.

The narrower trade deficit reflected a 1.2 percent decrease in the value of imports as well as a 0.2 percent uptick in the value of exports.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, when Q2 GDP was reported last week trade was a 0.6 of a percentage point drag on the 4% print."

"Today's lower than expected deficit will reduce this negative impact by likely adding about two tenths to the 4% GDP print all else equal," he added.

The prospect of stronger than previously reported second quarter GDP growth may add to recent worries about the Federal Reserve raising interest rates sooner than anticipated.

Negative sentiment may also be generated by news that Sprint (S) has ended talks to acquire T-Mobile (TMUS) and that Rupert Murdoch's 21st Century Fox (FOX) withdrew its takeover offer for Time Warner (TWX).