Lingering Economic Worries May Lead To Pullback On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to give back ground after moving sharply higher over the two previous sessions.

Traders may look to cash in on the strong gains posted early in the week amid lingering concerns about the outlook for the global economy.

Central banks around the world appear poised to continue raising interest in the months ahead, potentially tipping the global economy into a recession as they seek to combat elevated inflation.

A rebound by treasury yields may also weigh on the markets, with the yield on the benchmark ten-year note regaining ground after moving notably lower over the two previous sessions.

The futures have seen continued weakness following the release of a report from payroll processor ADP showing private sector employment in the U.S. increased by slightly more than expected in the month of September.

U.S. stocks climbed higher on Tuesday, rising sharply for a second straight session amid hopes the Federal Reserve will slow down its aggression with regard to interest rate hikes after data showed a drop in job openings in the country.

The market had rallied on Monday after data showed a slower than expected pace of growth in U.S. manufacturing activity in the month of September and a drop in construction spending as well.

The dollar fell, and bond yields dropped amid rising bets the Fed will be less hawkish with its policy stance.

The major averages all post strong gains. The Dow ended stronger by 825.43 points or 2.8 percent at 30,316.32. The S&P 500 soared 112.50 points or 3.1 percent to settle at 3,790.93, and the Nasdaq surged to 11,176.41, gaining 360.97 points or 3.3 percent.

Microsoft, Alphabet, and Apple Inc. ended stronger by 2.5 to 3.2 percent.

Shares of Twitter Inc. spiked 22 percent on reports Elon Musk is considering acquiring the company at the previously agreed price of $54.20 per share.

Rivian Automotive zoomed almost 14 percent after the company announced that it produced 7,363 electric pickups and SUVs during the third quarter of 2022.

Travel stocks Norwegian Cruise Line, Royal Caribbean, Carnival, Delta Air Lines and American Airlines also posted strong gains.

General Motors rallied nearly 9 percent after the company reported a 24 percent increase in sales in the third quarter.

Ford Motor Company shares gained 7.8 percent after reporting a 16 percent increase in third quarter sales compared with a year earlier.

Commodity, Currency Markets

Crude oil futures are inching up $0.25 to $86.77 a barrel after surging $2.89 to $86.52 barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,719.70, down $10.80 compared to the previous session's close of $1,730.50. On Tuesday, gold jumped $28.50.

On the currency front, the U.S. dollar is trading at 144.45 yen compared to the 144.13 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $0.9914 compared to yesterday's $0.9986.

Asia

Asian shares advanced on Wednesday after U.S. stocks posted strong gains for a second consecutive session overnight on expectations that the U.S. Federal Reserve might ease off on major rate hikes heading into 2023.

Mainland China markets remained shut for the Golden Week holiday. Indian markets were also closed for a holiday.

Hong Kong's Hang Seng Index soared 5.9 percent to 18,087.97 as trading resumed after Tuesday's holiday.

Japanese shares eked out modest gains as investors awaited further signs of economic health from the United States, with ADP employment data, non-farm payrolls and ISM services data due this week.

The Nikkei 225 Index rose 0.5 percent to 27,120.53, ending above the key 27,000 level for the first time in two weeks. The broader Topix closed 0.3 percent higher at 1,912.92.

Heavyweight Fast Retailing rose 0.9 percent after announcing an 11 percent year-on-year increase in sales at domestic Uniqlo stores. Likewise, footwear firm ABC-Mart rallied 3.7 percent on upbeat September numbers. Nippon Sheet Glass led losses to close 4.3 percent lower.

Seoul stocks ended on a positive note as official data showed consumer inflation in the country slowed for a second month in September.

The Kospi rose 0.3 percent to 2,215.22, extending gains for a second straight session led by tech stocks. Market bellwether Samsung Electronics gained 1.5 percent and chip giant SK Hynix jumped 4.2 percent.

Australian markets rallied, with financials leading another day of broad gains after the Reserve Bank surprised markets by delivering a smaller than expected rate hike. Encouraging retail sales and service sector data also offered some support.

The benchmark S&P ASX 200 Index climbed 1.7 percent to 6,815.70, while the broader All Ordinaries Index closed 1.8 percent higher at 7,030.90.

Link Administration shares soared 6.7 percent after the share registry firm received a $1.27 billion bid for its corporate markets and banking segments from Canada's Dye & Durham.

Europe

European stocks have fallen on Wednesday after two sessions of strong gains. Recession woes have returned to the fore after a survey showed Euro zone business activity fell more than expected last month, increasing the likelihood of a recession in the 19-member common currency bloc.

S&P Global's final composite PMI for the region fell to a 20-month low of 48.1 in September from 48.9 in August, short of a preliminary estimate of 48.2.

In the U.K., the seasonally adjusted composite PMI slipped to 49.1 in September from 49.6 in August.

Euro zone bond yields rose, and the dollar rebounded as hawkish commentary from the Reserve Bank of New Zealand suggested that fighting inflation is still a priority for many central banks.

While the German DAX Index has slumped by 1.1 percent, the U.K.'s FTSE 100 Index is down by 0.9 percent and the French CAC 40 Index is down by 0.8 percent.

LafargeHolcim has moved lower. The Swiss maker of building materials said it has completed the acquisition of Izolbet, a Polish specialty building solutions provider.

Arcadis NV has also declined. The company has agreed to acquire DPS Group, a consultancy, engineering and construction management company for Life Sciences and Semiconductor facilities, for a cash consideration of 232 million euros.

Tesco has also fallen. The British grocery chain predicted full-year profits at the lower end of its target range amid lingering "uncertainties" in the trading environment due to cost inflation.

On the other hand, Vertu Motors has moved sharply higher after posting higher revenue in its interim results for the first half of 2022.

Halfords has also shown a strong move to the upside after it agreed to acquire Lodge Tyre for up to £37.2 million in cash.

SAS AB has also jumped. The Scandinavian airline said it had made changes to contracts with 10 lessors representing 36 jets, which would help it save nearly $700 million per year by 2026.

STMicroelectronics NV has also risen in Paris. The European Commission has approved, under EU State aid rules, a 292.5 million euros Italian measure to support the semiconductor manufacturer in the construction of a plant in the semiconductor value chain in Catania, Sicily.

U.S. Economic Reports

Private sector employment in the U.S. increased by slightly more than expected in the month of September, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment surged by 208,000 jobs in September after climbing by an upwardly revised 185,000 jobs in August.

Economists had expected employment to jump by 200,000 jobs compared to the addition of 132,000 jobs originally reported for the previous month.

The Commerce Department released a separate report showing the U.S. trade deficit narrowed by more than expected in the month of August.

The Commerce Department said the trade deficit narrowed to $67.4 billion in August from a revised $70.5 billion in July.

Economists had expected the deficit to shrink to $68.0 billion from the $70.6 billion originally reported for the previous month.

The decrease in the size of the trade deficit came as the value of imports tumbled by 1.1 percent to $326.3 billion, while the value of exports dipped by 0.3 percent to $258.9 billion.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of September.

The ISM's services PMI is expected to dip to 58.9 in September from 61.8 in August, although a reading above 50 would still indicate growth in the sector.

The Energy Information Administration is due to release its report on oil inventories in the week ended September 30th at 10:30 am ET.

Crude oil inventories are expected to inch up by 0.1 million barrels after edging down by 0.2 million barrels in the previous week.

At 4 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to speak on Staying Resolute in the Battle Against Inflation before a virtual Northwestern University Institute for Policy Research Distinguished Public Policy Lecture.