Futures Pointing To Extended Pullback On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to see further downside following the moderate pullback in the previous session.

Lingering uncertainty about the outlook for trade and the global economy may weigh on the markets following the surge seen over the past several weeks.

Stocks have shown a substantial recovery from their early April lows, but traders have recently been questioning the strength of the rebound amid a lack of clear progress on new trade deals.

A continued increase by bond yields may also generate some selling pressure, with the thirty-year bond yield climbing above 5 percent due to concerns a new U.S. tax bill could worsen the country's deficit.

Overall trading activity is likely to remain relatively subdued, however, as a lack of major U.S. economic data keeps some traders on the sidelines.

The U.S. economic calendar picks back up in the coming days, with reports on weekly jobless claims and new and existing home sales likely to attract attention.

After recovering from an early slump to end the previous session slightly higher, stocks moved back to the downside during trading on Tuesday. The major averages all moved lower, although selling pressure remained somewhat subdued.

The major averages climbed well off their worst levels going into the end of the day remained in negative territory. The Dow fell 114.83 points or 0.3 percent to 42,677.24, the Nasdaq slid 72.75 points or 0.4 percent to 19,142.71 and the S&P 500 declined 23.14 points or 0.4 percent to 5,940.46.

The weakness on Wall Street came as some traders looked to cash in on the strong upward move seen over the past several weeks.

The major averages have climbed well off their April lows amid easing trade concerns, with the Nasdaq and the S&P 500 reaching their best levels in almost three months.

However, JPMorgan Chase (JPM) CEO Jamie Dimon has warned stock market values may not properly represent the risks of higher inflation and even stagflation.

"My own view is people feel pretty good because you haven't seen effective tariffs," Dimon said during the financial giant's annual investor day meeting on Monday. "The market came down 10%, [it's] back up 10%. That's an extraordinary amount of complacency."

On the other hand, Carson Group chief market strategist Ryan Detrick told CNBC the rebound should be taken seriously even amid lingering concerns about trade and the economy.

"All these worries and concerns are real. We're not ignoring everything that's out there," Detrick said. "But are we listening to what the market's doing, right?

"The previous 27 trading days, the S&P 500 is up close to 20 percent," he added. "That's not a bear market rally. That's not a short-covering rally,"

While most of the major sectors ended the day showing only modest moves, housing stocks saw notable weakness, dragging the Philadelphia Housing Sector Index down by 1.2 percent.

Transportation and networking stocks also saw some weakness on the day, while gold stocks moved sharply higher along with the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are jumping $0.92 to $62.95 a barrel after slipping $0.11 to $62.03 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,295.80, up $11.20 compared to the previous session's close of $3,284.60. On Tuesday, gold surged $51.10.

On the currency front, the U.S. dollar is trading at 143.78 yen compared to the 144.51 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1320 compared to yesterday's $1.1283.

Asia

Asian stocks ended mostly higher on Wednesday, although Japanese markets underperformed as the yen continued to strengthen on BoJ rate hike bets and data showed Japanese export growth continued to decelerate for the second consecutive month.

The dollar dipped as investors fretted about the U.S. fiscal and economic outlook. Oil prices jumped over 1 percent after reports emerged that Israel is preparing a strike on Iranian nuclear facilities, a development that might disrupt oil supplies.

Gold rallied to a 1 1/2-week high near $3,320 per ounce amid U.S. fiscal uncertainty as President Donald Trump's sweeping tax bill inches through Congress.

Chinese shares eked out modest gains as Morgan Stanley raised its Chinese GDP forecast to 4.5 percent for 2025, citing easing trade tensions.

The benchmark Shanghai Composite Index edged up 0.2 percent to 3,387.51, while Hong Kong's Hang Seng Index added 0.6 percent to close at 23,827.78.

Japanese markets ended lower as a strengthening yen sapped demand for exporters. Soft trade data, escalating geopolitical tensions and tariff-related uncertainty also prompted traders to lock in recent gains.

The Nikkei 225 Index fell 0.6 percent to 37,298.98, while the broader Topix Index settled 0.2 percent lower at 2,732.88.

Tokio Marine Holdings tumbled 2.6 percent after a bleak profit forecast. Mizuho Financial Group surged 2.7 percent after announcing its decision to offload cross-shareholdings.

Seoul stocks rose sharply after two days of losses. The Kospi jumped 0.9 percent to 2,625.58, with bio and heavy industry shares pacing the gainers.

Leading bio firm Samsung Biologics soared 7.1 percent and top defense equipment manufacturer Hanwha Aerospace surged 4.3 percent.

Banks led Australian markets higher a day after the Reserve Bank of Australia delivered its widely expected rate cut.

The benchmark S&P/ASX 200 Index rose 0.5 percent to 8,386.80, reaching its highest level in more than three months. The broader All Ordinaries Index closed up 0.5 percent at 8,611.70.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index gained 0.5 percent to end at 12,703.10.

Europe

European stocks have pulled back from nine-week highs on Wednesday, as investors fret about the lack of progress on trade deals and closely monitored discussions on the U.S. budget bill and federal deficit.

Sentiment was also spooked after data showed U.K. consumer price inflation accelerated more than expected in April.

The consumer price index rose 3.5 percent year-on-year in April, faster than the 2.6 percent increase in March. Inflation was expected to rise to 3.3 percent.

On a monthly basis, the CPI advanced at a faster pace of 1.2 percent after rising 0.3 percent in March. This was also faster than the forecast of 1.1 percent.

While the U.K.'s FTSE 100 Index is up by 0.1 percent, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is down by 0.6 percent.

Swiss bank Julius Baer has shown a significant move to the downside after saying it has been hit with another large loan loss.

Close Brothers has also slumped after the loan book decreased 0.9 percent in the third quarter and 3.5 percent year-to-date to 9.7 billion pounds in its banking division.

Sportswear retailer JD Sports Fashion has also seen a steep drop after reporting lower annual profit.

Marks & Spencer has also fallen after it projected a 300-million-pound loss due to a recent cyberattack.

Meanwhile, drug giant AstraZeneca has moved higher after successfully completing the acquisition of EsoBiotec.

Severn Trent has also advanced. The water utility delivered strong annual profit growth and said it expects EPS to double by 2028.

German chipmaker Infineon has also risen after the company said it would develop a new power delivery chip with Nvidia.

U.S. Economic News

The Energy Information Administration is due to release its report on oil inventories in the week ended May 16th at 10:30 am ET. Crude oil inventories are expected to fall by 1.9 million barrels after jumping by 3.5 million barrels in the previous week.

At 12 pm ET, Richmond Federal Reserve President Thomas Barkin is scheduled to participate in a "Fed Listens" event as part of the "Elevating What Works" 2025 Investing in Rural America Conference.

The Treasury Department is due to announce the results of this month's auction of $16 billion worth of twenty-year bonds at 1 pm ET.