Stocks May Give Back Ground In Early Trading - U.S. Commentary

(RTTNews) - After ending the two previous sessions sharply higher, stocks may give back some ground 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 31 points.

A pullback by the price of crude oil may contribute to early weakness on Wall Street after higher oil prices contributed to the strength seen in the two previous sessions.

Crude oil for March delivery is currently tumbling $1.84 to $51.21 a barrel after rallying $3.48 to $53.05 a barrel on Tuesday. The price increase in the previous session lifted oil to its highest closing level of the New Year.

Early selling pressure may also be generated by the release of a report from payroll processor ADP showing that private sector employment in the U.S. rose by less than expected in the month of January.

ADP said private sector employment increased by 213,000 jobs in January following an upwardly revised increase of 253,000 jobs in December.

Economists had expected employment to climb by about 223,000 jobs compared to the addition of 241,000 jobs originally reported for the previous month.

Mark Zandi, chief economist of Moody's Analytics, said, "Employment posted another solid gain in January, although the pace of growth is slower than in recent months."

"Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring," he added.

The disappointing data may raise some concerns about Friday's employment report from the Labor Department, which includes both public and private sector jobs.

Economists currently expect the Labor Department report to show an increase of about 230,000 jobs in January following the addition of 252,000 jobs in December.

Not long after the open, the Institute for Supply Management is scheduled to release a separate report on service sector activity in the month of January.

The ISM's index of activity in the service sector is expected to edge up to 56.5 in January from 56.2 in December, with a reading above 50 indicating growth in the sector.

With the price of crude oil setting the course for the markets, stocks moved sharply higher during trading on Tuesday. The gains on the day further offset the weakness that was seen last week.

The major averages closed at their best levels of the day for the second consecutive session. The Dow soared 305.36 points or 1.8 percent to 17,666.40, the Nasdaq jumped 51.05 points or 1.1 percent to 4,727.74 and the S&P 500 surged up 29.18 points or 1.4 percent to 2,050.03.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 2 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.

Meanwhile, the major European markets are seeing some weakness on the day. While the U.K.'s FTSE 100 Index has fallen by 0.6 percent, the German DAX Index and the French CAC 40 Index are down by 0.2 percent and 0.1 percent, respectively.

In commodities trading, an ounce of gold is currently trading at $1,267.90, up $7.60 from the previous session's close of $1,260.30. On Tuesday, gold fell $16.60.

On the currency front, the U.S. dollar is trading at 117.63 yen compared to the 117.57 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1436 compared to yesterday's $1.1481.