Stocks May Regain Ground Following Recent Sell-Off

(RTTNews) - The major U.S. index futures are pointing to a higher opening on Wednesday, with stocks likely to regain ground following the sell-off seen in recent sessions.

Bargain hunting is likely to contribute to initial strength on Wall Street, with traders picking up stocks at reduced levels on the heels of recent weakness.

The continued sell-off seen in a holiday-shortened session on Monday dragged the major averages down to their lowest closing levels in well over a year.

Trading activity is likely to remain somewhat subdued, however, as many traders remain away from their desks after the Christmas Day holiday on Tuesday.

A lack of major U.S. economic data may also keep traders on the sidelines, although reports on new home sales, consumer confidence, and pending home sales may attract attention in the coming weeks.

Meanwhile, the ongoing government shutdown may limit any recovery attempt by the markets, with lawmakers not expected to reconvene until Thursday.

President Donald Trump has stated the government will not reopen until Democrats agree to fund his controversial border wall.

Stocks showed another substantial move to the downside in a holiday-shortened session on Monday, extending the sell-off seen over the past several sessions. With the steep drop on the day, the major averages once again tumbled to their lowest closing levels in well over a year.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow plummeted 653.17 points or 2.9 percent to 21,792.20, the Nasdaq tumbled 140.08 points or 2.2 percent to 6,192.92 and the S&P 500 plunged 65.52 points or 2.7 percent to 2,351.10.

The continued weakness on Wall Street reflected recent downward momentum, although trading activity was somewhat subdued ahead of the Christmas Day holiday on Tuesday.

Many traders remained away from their desks to get a head start on the holiday, with the markets closing three hours earlier than usual.

Nonetheless, today marked the first day traders had an opportunity to react to the partial government shutdown that took effect at midnight last Friday.

The partial shutdown is likely to continue until after Christmas, as President Donald Trump and Democratic lawmakers remain "far apart" on the issue of funding for the president's controversial border wall.

The Senate adjourned Saturday without a deal to re-open the shut down parts of the federal government and is not expected to reconvene until Thursday, December 27th.

The ongoing shutdown comes after Vice President Mike Pence met with Senate Minority Leader Chuck Schumer, D-N.Y., but a spokesman for the Democratic leader said, "Unfortunately, we're still very far apart."

Senate Majority Leader Mitch McConnell, R-Ken., noted party leaders have pushed the "pause button" on holding votes until Trump and Democrats reach an agreement.

The economic calendar for the week started off quiet due to the holiday on Tuesday, although reports on new home sales, consumer confidence, and pending home sales may attract attention later in the week.

Interest rate-sensitive utilities stocks turned in some of the market's worst performances on the day, resulting in a 4.2 percent nosedive by the Dow Jones Utilities Average. The average plunged to its lowest closing level in six months.

The sell-off by utilities stocks came as Trump continued to attack the Federal Reserve for raising interest rates, calling the Fed the "only problem" for the economy.

Considerable weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil.

Commercial real estate, software, and chemical stocks also saw significant weakness, reflecting another broad based sell-off on Wall Street.

Meanwhile, gold stocks were among the few groups to buck the downtrend, with the NYSE Arca Gold Bugs Index jumping by 3.4 percent. The rally by gold stocks came amid an increase by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are rising $0.35 to $42.88 barrel after plunging $3.06 to $42.53 a barrel on Monday. Meanwhile, after jumping $13.70 to $1,271.80 ounce in the previous session, gold futures are climbing $6 to $1,227.80 an ounce.

On the currency front, the U.S. dollar is trading at 110.57 yen compared to the 110.31 it fetched on Tuesday. Against the euro, the dollar is valued at $1.1388 compared to yesterday's $1.1392.

Asia

Japanese stocks bucked the downtrend, but Asian stocks moved mostly lower on Wednesday as political uncertainty in the U.S. following a partial government shutdown and mounting concerns about global economic growth led investors to stay away from stocks once again.

U.S. President Donald Trump's highly critical comments about the Federal Reserve's interest rate decisions also dented investor sentiment.

With a few markets in the region closed for public holiday, movements were a bit sluggish amid subdued trading activity.

The Japanese market, which ended sharply lower at a 20-month low on Tuesday, bounced back strongly on bargain hunting and ended firmly positive. A weaker yen contributed as well to market's rise.

The benchmark Nikkei 225 Index ended up 171.32 points or 0.9 percent at 19,327.06 after having surged to a high of 19,530.35 intraday.

Shares from the precision instruments, oil, services, textiles, pharmaceuticals, chemicals, electric appliances, retail and construction sectors moved higher. Banks, mining, steel and automobile stocks ended mixed.

Among other markets in the Asia-Pacific region, South Korea and Singapore ended notably lower, while stocks in Taiwan and Shanghai saw more modest weakness. Malaysia and Indonesia also closed weak.

Indian stocks bounced back after a weak start and a subsequent sharp plunge. Markets in Australia, New Zealand and Hong Kong were closed for public holidays.

Europe

The major European markets remain closed on the day as a result of the Boxing Day holiday.

U.S. Economic Reports

Standard & Poor's is scheduled to release its report on home prices in major metropolitan areas in the month of October at 9 am ET.

The annual rate of growth by the S&P CoreLogic Case-Shiller 20-City Composite Home Price Index is expected to slow to 4.9 percent in October from 5.1 percent in September.

At 1 pm ET, the Treasury Department is due to announce the results of its auction of $41 billion worth of five-year notes.