The major U.S. index futures are pointing to a lower opening on Wednesday, with stocks likely to move to the downside after closing mixed for two consecutive sessions.
Stock futures fluctuated earlier in the day before coming under pressure following the release of the Labor Department’s report on producer price inflation in the month of September.
The report said producer prices rose in line with economist estimates in September, although the annual rate of core producer price growth accelerated from the previous month.
Treasury yields are moving higher following the release of the report, adding to recent concerns about the outlook for interest rates.
Stocks fluctuated over the course of the trading day on Tuesday, extending the volatile performance seen in the previous session. The major averages spent the session bouncing back and forth across the unchanged line before closing mixed for the second straight day.
While the tech-heavy Nasdaq inched up 2.07 points or less than a tenth of a percent to 7,738.02, the Dow dipped 56.21 points or 0.2 percent to 26,430.57 and the S&P 500 edged down 4.09 points or 0.1 percent to 2,880.34.
The choppy trading on Wall Street came as traders kept an eye on treasuries amid renewed concerns about the outlook for interest rates.
With the bond markets re-opening following the Columbus Day holiday on Monday, treasury yields turned lower over the course of the session after initial moving higher.
Recent upbeat economic data pushed the yield on the benchmark ten-year note to its highest levels in over seven year last Friday.
Meanwhile, traders largely shrugged off news the International Monetary Fund lowered its forecast for U.S. and Chinese economic growth.
Citing the “negative effect of recent tariff actions,” the IMF said economic growth in the U.S. and China is now expected to slow to 2.5 percent and 6.2 percent, respectively, next year.
Overall trading activity was somewhat subdued, as a lack of major U.S. economic data kept some traders on the sidelines following the holiday on Monday.
Most of the major sectors ended the day showing only modest moves, although substantial weakness was visible among chemical stocks. Reflecting the weakness in the chemical sector, the S&P Chemical Sector Index plunged by 3.6 percent to its lowest closing level in five months.
PPG Industries (PPG) led the chemical sector lower after warning of weaker than expected third quarter results due in part to higher raw material and logistics costs.
Significant weakness also emerged among housing stocks, as reflected by the 1.9 percent slump by the Philadelphia Housing Sector Index. With the drop, the index fell to a one-year closing low.
Transportation and gold stocks also moved notably lower on the day, while energy stocks moved higher along with the price of crude oil.
Commodity, Currency Markets
Crude oil futures are falling $0.43 to $74.54 a barrel after climbing $0.67 to $74.96 a barrel on Tuesday. Meanwhile, after rising $2.90 to $1,191.50 an ounce in the previous session, gold futures are slipping $1.90 to $1,189.60 an ounce.
On the currency front, the U.S. dollar is trading at 113.25 yen compared to the 112.96 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1494 compared to yesterday’s $1.1491.
Asian stocks ended mixed on Wednesday as growth worries persisted and investors awaited more clarity on the future path of treasury yields. Underlying sentiment remained supported somewhat amid receding worries over Italy’s budget.
The dollar dipped after U.S. President Donald Trump criticized the Federal Reserve once again, saying he believes the central bank is moving too quickly with interest rate hikes.
Trump also repeated a threat to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates for the recent levies and other measures.
Chinese shares ended a tad higher on expectations that policymakers will take further steps to ease a funding crunch and lift growth amid a protracted trade war with the U.S.
The benchmark Shanghai Composite Index gained 4.82 points or 0.2 percent to finish at 2,725.84, while Hong Kong’s Hang Seng Index finished marginally higher at 26,193.07.
Japanese shares ended a choppy session slightly higher despite the dollar moving lower against the yen and SoftBank shares tumbling after reports that it is in talks to buy a majority stake in U.S. shared office space provider WeWork Cos.
The Nikkei 225 Index rose 36.65 points or 0.2 percent to 23,506.04, while the broader Topix Index closed 0.2 percent higher at 1,763.86, led by defensive stocks.
Oil firm Inpex Corp. rallied 2.7 percent and Japan Petroleum jumped 3.4 percent after crude oil prices rebounded overnight. Heavyweight SoftBank Group plunged 5.4 percent
In economic news, the Cabinet Office said that the total value of core machine orders in Japan jumped a seasonally adjusted 6.8 percent sequentially n August. That beat expectations for a decline of 3.9 percent following the 11.0 percent spike in July.
Australian stocks edged up slightly as bargain hunters lapped up banks and healthcare stocks after a recent string of heavy losses. The benchmark S&P-ASX 200 Index inched up 8.70 points or 0.1 percent to 6,049.80, while the broader All Ordinaries Index crept up 8.30 points or 0.1 percent to 6,163.80.
Banks eked out modest gains despite Morgan Stanley analysts warning that there could be more pain in store. Healthcare stocks also rebounded, with CSL and Cochlear climbing 2-3 percent.
Miners BHP Billiton, Fortescue Metals Group and Rio Tinto rose between 0.3 percent and 0.6 percent, helped by stronger iron ore and copper prices. Energy stocks turned in a mixed performance as oil prices dipped in Asian trading on growth concerns.
Education firm Navitas soared almost 22 percent after it received a A$1.97 billion takeover bid from a consortium comprising private equity firm BGH Capital, fund manager AustraliaSuper and top shareholder Rodney Jones.
Australia’s consumer confidence rebounded in October, survey data from Westpac showed today. The Westpac Melbourne Institute Index of Consumer Sentiment rose 1 percent to 101.5 in October.
Meanwhile, South Korean stocks tumbled to a 17-month low on growth worries, a day after the International Monetary Fund cut its growth outlook for the country this year to 2.8 percent from 3 percent.
The benchmark Kospi fell 25.22 points or 1.1 percent to 2,228.61, extending losses for the seventh straight session and hitting its lowest level since May of 2017.
Builders paced the declines, with Hyundai Engineering & Construction plunging 10.5 percent. Tech stocks also came under selling pressure, with LG Electronics closing down 3.8 percent.
European stocks are mostly lower in cautious trading on Wednesday as investors fret about slowing Chinese growth and watch developments around Brexit and Italy’s budget.
The euro has held steady, while the British pound has added to gains against the dollar on hopes for a breakthrough in Brexit negotiations. Media reports suggest that a Brexit deal could come as early as Monday.
While the U.K.’s FTSE 100 Index has dipped by 0.2 percent, the German DAX Index is down by 0.9 percent and the French CAC 40 Index is down by 1 percent.
Shares of Scapa Group have fallen sharply after the supplier of bonding solutions reported a decrease in first-half revenues due to adverse currency movements.
French luxury goods conglomerate LVMH has also moved significantly lower on fears of a looming slowdown in Chinese demand as the U.S.-China trade war escalates.
Meanwhile, HSBC Holdings has advanced after the bank entered into a $765 million settlement in the U.S over its sale of mortgage-based securities during the run-up to the financial crisis.
In economic news, French industrial production grew at the slowest pace in three months in August, the statistical office Insee said.
Industrial production climbed 0.3 percent in August, the weakest since May when it remained flat. Production had increased 0.8 percent in July.
The U.K. economy logged flat growth in August as an increase in industrial production was offset by contractions in the construction and farm sectors, a government report showed.
Gross domestic product remained unchanged after expanding 0.4 percent in July. Economists expected GDP to climb 0.2 percent.
U.S. Economic Reports
With an increase in prices for services offsetting a modest drop in prices for goods, the Labor Department released a report showing producer prices in the U.S. rose in line with economist estimates in the month of September.
The Labor Department said its producer price index for final demand increased by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to rise by 0.2 percent.
Excluding decreases in prices for food and energy, core producer prices still rose by 0.2 percent in September after slipping by 0.1 percent in August. The uptick in core prices also matched economist estimates.
The report said the annual rate of producer price growth slowed to 2.6 percent in September from 2.8 percent in August, while the annual rate of core producer price growth accelerated to 2.5 percent from 2.3 percent.
At 10 am ET, the Commerce Department is scheduled to release its report on wholesale inventories in the month of August. Wholesale inventories are expected to climb by 0.8 percent.
The Treasury Department is due to announce the results of its auction of $36 billion worth of three-year notes at 11:30 am ET.
At 12:15 pm ET, Chicago Federal Reserve President Charles Evans is scheduled to give a speech on the U.S. economic outlook at the Flint & Genesee Chamber of Commerce Luncheon in Flint, Michigan.
The Treasury Department is due to announce the results of its auction of $23 billion worth of ten-year notes at 1 pm ET.
At 6 pm ET, Atlanta Fed President Raphael Bostic is scheduled to participate in an armchair discussion on the economic outlook at a National Association of Corporate Directors event at the Buckhead Club in Atlanta, Georgia.
Stocks In Focus
Shares of Sears Holdings (SHLD) are moving sharply lower in pre-market trading after a report from the Wall Street Journal said the department store chain has hired advisers to prepare for a possible bankruptcy filing that could come as soon as this week.
Industrial and construction supplies distributor Fastenal (FAST) is also seeing notable pre-market weakness despite reporting third quarter results that exceeded analyst estimates on both the top and bottom lines.
On the other hand, shares of PPG Industries (PPG) may rebound from yesterday’s sell-off following news activist investor Nelson Peltz’s Trian Partners has accumulated 2.9 percent stake in the paint and coatings maker.
Fast food giant McDonald’s (MCD) could also see initial strength after Guggenheim Securities upgraded its rating on the company’s stock to Buy from Neutral.
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