Futures Pointing To Initial Rebound On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside following the pullback seen to start the week.

Traders may look to pick up stocks at somewhat reduced levels following the recent weakness, which dragged the S&P 500 down to its lowest closing level in over a month.

A pullback by the price of crude oil may also generate early buying interest, as U.S. crude oil futures are tumbling by nearly 2 percent after soaring by almost 6 percent over the past two days.

Crude oil prices are giving back ground after a report from the American Petroleum Institute said U.S. crude oil inventories unexpectedly jumped by 7.1 million barrels last week.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve's highly anticipated monetary policy announcement later this afternoon.

The Fed is widely expected to raise interest rates, with CME Group's FedWatch Tool currently indicating a 92.7 percent chance of a quarter point rate hike.

Stocks moved mostly lower during trading on Tuesday, adding to the losses posted during Monday's session. The major averages all moved to the downside on the day, with the S&P 500 dropping to its lowest closing level in over a month.

The major averages ended the day off their lows of the session but still firmly in negative territory. The Dow declined 328.09 points or 0.6 percent to 52,093.11, the Nasdaq slid 204.84 points or 0.8 percent to 25,981.57 and the S&P 500 fell 34.25 points or 0.5 percent to 7,585.73.

The weakness on Wall Street came amid a notable increase in treasury yields, with the yield on the benchmark ten-year note reaching its highest intraday level since July 2007.

Concerns about the outlook for inflation and interest rates have driven yields higher ahead of the Federal Reserve's monetary policy decision.

"Market commentators have long argued that Treasuries hitting 5% is the trigger for an equity market correction," said Dan Coatsworth, head of markets at AJ Bell. "At this level, investors might wonder what's the point in holding risky equities when they can get 5% on low-risk government bonds."

He added, "It is a psychological level and can sometimes act as a warning sign for a market correction rather than be a guaranteed tipping point for equities to slump."

A sharp increase by the price of crude oil also weighed on stocks, with U.S. crude oil futures spiking by more than 4 percent.

Supply concerns continued to drive the price of crude oil higher amid reports of fresh Houthi strikes on Saudi Arabia.

However, traders seemed somewhat reluctant to make more significant moves ahead of the Fed's monetary policy announcement.

Retail stocks showed a significant move to the downside on the day, dragging the Dow Jones U.S. Retail Index down by 2 percent to its lowest closing level in well over a month.

The spike in the price of crude oil also contributed to considerable weakness among airline stocks, as reflected by the 1.9 percent loss posted by the NYSE Arca Airline Index.

Software, brokerage and utilities stocks also showed notable moves to the downside, while energy stocks surged along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are plunging $2.11 to $103.72 a barrel after soaring $4.44 to $105.83 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,381.30, up $48.50 compared to the previous session's close of $4,332.80. On Tuesday, gold fell $19.10.

On the currency front, the U.S. dollar is trading at 155.15 yen compared to the 155.08 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1534 compared to yesterday's $1.1543.

Asia

Asian stocks ended flat to slightly higher in cautious trading on Wednesday as oil prices pulled back from recent highs and investors braced for a closely watched Federal Reserve rate decision later in the day.

Markets currently assign a roughly 92 percent probability to a quarter-point rate hike, which would lift the federal-funds target range from 3.75-4.00 percent to 4.00-4.25 percent.

That would mark the Fed's first hike since 2023. It is believed a surprise hold or strong dovish dissent could have a materially negative impact on markets.

It remains to be seen whether the policy statement, updated projections and Chair Kevin Warsh's press conference would support market expectations for extended hikes.

The U.S. dollar held gains to hover near a two-week high after the yield on the U.S. 10-year Treasury bond breached the 5 percent mark on Tuesday for the first time in three years.

Gold jumped nearly 1 percent to $4,337 an ounce after a two-day drop. Oil prices fell more than 1 percent in Asian trading after industry data showed an unexpected build in U.S. crude inventories.

Both Brent and WTI contracts settled more than $3 higher at their highest levels since May 19 on Tuesday amid expectations of a prolonged disruption of Saudi Arabian oil flows to its Red Sea coast following last week's drone attack on its east-west pipeline.

Concerns over global oil supplies intensified after Saudi Arabia suspended Yanbu oil loadings and cancelled some cargo deliveries to European customers.

China's Shanghai Composite Index reversed course to end 0.7 percent higher at 3,891.60 after reports emerged that the United States and China are in discussions to reduce tariffs on select goods under a proposed $30-billion reciprocal tariff package.

Hong Kong's Hang Seng Index edged up 0.2 percent to 24,713.78 ahead of a planned Trump-Xi meeting later this month.

Japanese markets recovered from an early slide to end notably higher amid bets that recent gains in the yen will be short-lived.

The Nikkei 225 Index climbed 0.7 percent to 63,923, marking its first gain in four sessions. The broader Topix Index settled 0.6 percent higher at 4,061.72. While energy producer Inpex rallied 3.2 percent, tech stocks such as SoftBank Group and Kioxia fell around 2 percent each.

Seoul stocks rebounded from morning lows to finish higher, led by tech heavyweights Samsung Electronics and SK Hynix. The Kospi Index surged 1.4 percent to 6,717.97 after SK Hynix production workers approved a revised labor agreement.

Australian markets eked out modest gains as higher metals prices helped mining stocks recover from recent losses. The benchmark S&P/ASX 200 Index rose 0.3 percent to 8,696.50 while the broader All Ordinaries Index closed 0.3 percent higher at 8,874.50.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index jumped 1.0 percent to 13,622.72, snapping a four-day losing streak ahead of the release of second quarter GDP data.

Europe

European stocks are mostly higher on Wednesday as the recent rally in crude oil prices pauses and bond yields ease from recent highs ahead of the Federal Reserve's interest rate decision later in the day.

The British pound weakened against other major currencies after official data showed that U.K. consumer price inflation rose to a five-month high in August, largely due to higher motor fuel prices.

Inflation advanced to 3.1 percent from 2.9 percent in July, matching expectations. Core inflation that excludes energy, food, alcohol and tobacco remained unchanged at 2.6 percent in August.

While the German DAX Index is up by 0.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both up by 0.6 percent.

Vallourec, a provider of tubular solutions for oil, gas and new energy industry, has Paris after securing a major contract from Subsea7 for an offshore project in Brazil.

British housebuilder Barratt Redrow has also soared after reporting a higher profit for fiscal 2026, mainly helped by revenue growth.

German wind turbine manufacturer Nordex has also moved to the upside after securing a 91 MW order from TEUT Energieprojekte GmbH.

Meanwhile, WH Smith has slumped. The retailer said it expects annual pre-tax profit to be at the bottom end of its guidance range.

U.S. Economic News

Retail sales in the U.S. shot up by much more than expected in the month of August, according to a report released by the Commerce Department on Wednesday.

The Commerce Department said retail sales jumped by 1.2 percent in August after falling by a revised 0.5 percent in July.

Economists had expected retail sales to increase by 0.7 percent compared to the 0.6 percent drop originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales surged by 1.4 percent in August after dipping by 0.2 percent in July. Ex-auto sales were expected to rise by 0.5 percent.

A separate report released by the Labor Department on Wednesday showed import prices in the U.S. increased by much more than expected in the month of August.

The Labor Department said import prices climbed by 0.7 percent in August after falling by a revised 0.3 percent in July.

Economists had expected import prices to rise by 0.3 percent compared to the 0.4 percent decrease originally reported for the previous month.

The report also said export prices rose by 0.6 percent in August after tumbling by a revised 1.4 percent in July.

Export prices were expected to increase by 0.5 percent compared to the 1.3 percent slump originally reported for the previous month.

At 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of September. The housing market index is expected to edge down to 34 in September after inching up to 35 in August.

The Commerce Department is also due to release its report on business inventories in the month of July at 10 am ET, Business inventories are expected to rise by 0.3 percent in July after coming in unchanged in June.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on crude oil inventories in the week ended September 11th.

The Federal Reserve is due to announce its monetary policy decision at 2 pm ET, followed by Fed Chair Kevin Warsh's post-meeting press conference at 2:30 pm ET.