U.S. Stocks May Give Back Ground Following Recent Strength

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

Profit taking may contribute to initial weakness on Wall Street following the recent strength, which has lifted the Nasdaq and S&P 500 to new record highs.

The downward momentum for stocks also comes amid a rebound by treasury yields, as the yield on the benchmark ten-year note surges back to its highest levels since 2002.

Treasury yields are moving back to the upside along with the price of crude oil, which is bouncing off its lowest level in a month.

The rebound by the price of crude oil comes amid fears Iran is once again stepping up attacks on tankers in the Strait of Hormuz.

U.K. Maritime Trade Operations said there had been nine attacks so far this month, half the number it reported for all of September in the waterway and Persian Gulf combined.

In a statement on the social media platform X, Yemen's Houthi group claimed that it carried out a series of drone and ballistic missile attacks targeting airports and military installations in Saudi Arabia.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of the Federal Reserve's latest monetary policy meeting later this afternoon.

The minutes may shed additional light on Fed officials' thinking ahead of the central bank's next interest rate decision later this month.

Ahead of the release of the minutes, CME Group's FedWatch Tool is currently indicating a 78.4 percent chance the Fed will leave rates unchanged and just a 21.6 percent chance of another quarter point rate hike.

After showing a notable move the upside early in the session, stocks gave back some ground over the course of the trading day on Tuesday but continued to turn in a strong performance. The major averages extended a recent upward trend, with the Nasdaq and S&P 500 reaching new record closing highs.

The major averages ended the day firmly in positive territory but well off their highs of the session. The S&P 500 climbed 44.98 points or 0.6 percent to 7,818.93, the Nasdaq rose 122.48 points or 0.5 percent to 27,599.79 and the Dow increased 253.38 points or 0.5 percent to 51,521.28.

The early strength on Wall Street came amid an extended slump by the price of crude oil as well as a pullback by treasury yields.

While crude oil prices recovered over the course of the trading day, yields remained in the red after recently surging to multi-decade highs.

"The big bond market sell-off appeared to be yesterday's news on Tuesday as the S&P 500 hit fresh record levels, supported by buoyant AI stocks," said AJ Bell head of markets Dan Coatsworth.

"Expectation is already building ahead of the U.S. third-quarter earnings season, with numbers starting to filter their way into the market in the coming weeks," he added. "Perceived AI winners are likely to be under the spotlight, particularly given how dominant these companies now are in US indices."

Traders were also looking ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting on Wednesday.

In U.S. economic news, a report released by the Commerce Department showed the U.S. trade deficit widened by more than expected in the month of August.

The Commerce Department said the trade deficit increased to $105.6 billion in August from a revised $92.8 billion in July.

Economists had expected the trade deficit to grow to $99.0 billion from the $88.6 billion originally reported for the previous month.

Networking stocks moved sharply higher over the course of the session, driving the NYSE Arca Networking Index up by 3.8 percent to its best closing level in almost two months.

Significant strength was also visible among airline stocks, as reflected by the 2.7 percent surge by the NYSE Arca Airline Index.

Interest rate-sensitive utilities stocks also turned in a strong performance amid the pullback by treasury yields, with the Dow Jones Utility Average jumping by 2.6 percent.

Housing, telecom and retail stocks also saw considerable strength on the day, while biotechnology stocks showed a significant move to the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.63 to $90.07 a barrel after inching up $0.01 to $89.44 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,102.80, down $84.30 compared to the previous session's close of $4,187.10. On Tuesday, gold rose $30.30.

On the currency front, the U.S. dollar is trading at 158.18 yen compared to the 158.10 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1169 compared to yesterday's $1.1258.

Asia

Asian stocks ended broadly lower in cautious trading on Wednesday as oil prices climbed and yields rebounded on fears Iran is stepping up attacks on tankers in the Strait of Hormuz.

U.K. Maritime Trade Operations said there had been nine attacks so far this month, half the number it reported for all of September in the waterway and Persian Gulf combined.

In a statement on the social media platform X, Yemen's Houthi group claimed that it carried out a series of drone and ballistic missile attacks targeting airports and military installations in Saudi Arabia.

Also, the Houthis denied being pushed back by government forces after Yemen's military said it had removed the pro-Iran group from areas around the Bab al-Mandab strait - a Red Sea chokepoint - and the port city of Mocha.

Technology stocks were in the spotlight after the Financial Times reported that Elon Musk's SpaceX wants to raise $40 billion to buy Nvidia chips.

Investors also awaited Samsung's third-quarter preliminary earnings for fresh signals on the strength of artificial intelligence-related chip demand.

The U.S. dollar held losses as stress in European bond markets abated and traders awaited the release of the Fed's September meeting minutes as well as speeches by Fed officials for additional clues on the path forward.

Gold fell almost 1 percent toward $4,100 an ounce, with inflationary risks and rate hike concerns in focus. Brent crude futures rose about 1 percent toward $102 a barrel, extending gains from the previous session amid persistent risks to Middle East Energy flows.

Chinese markets remained closed for the National Day holiday. Hong Kong's Hang Seng Index dropped 0.6 percent to 24,130.50 after two days of gains. Technology stocks came under selling pressure, with artificial intelligence developer Minimax tumbling 4.6 percent and Alibaba losing 2.8 percent.

Japanese markets ended sharply lower as investors closely watched developments in the Middle East conflict and scaled back BOJ rate hike bets.

The Nikkei 225 Index slid 0.9 percent to 70,035.71, giving up early gains due to profit taking in AI and semiconductor-related names. The broader Topix Index settled 0.7 percent lower at 4,154.11.

Among the prominent decliners, Disco Corp plummeted 6.3 percent, Kioxia Holdings slumped 4.5 percent, Tokyo Electron shed 2.4 percent and Advantest dipped 1.3 percent.

Seoul stocks ended lower for a second consecutive session due to concerns over elevated bond yields that have climbed to multidecade highs. The Kospi Index plunged 2 percent to 6,803.90, led by declines in technology shares.

While market bellwether Samsung Electronics dropped 1.3 percent ahead of its preliminary earnings report, its chip-making rival SK Hynix fell 2.8 percent.

Australian markets fluctuated before finishing marginally lower to end a three-day winning streak. While banks and mining stocks faced pressure, uranium stocks surged after the announcement of a major nuclear power agreement involving Google and Constellation Energy.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index slipped 0.1 percent to 13,684.04.

Europe

European shares have moved mostly lower on Wednesday, with renewed Middle East tensions and France's deepening fiscal crisis keeping investors on edge.

Brent crude futures traded above $101 a barrel following more attacks on vessels in the Persian Gulf region.

German, French and Italian bond yields jumped as investors refocused on fiscal worries.

In economic news, German industrial output expanded 2.0 percent on a monthly basis in August, in contrast to the 1.2 percent decrease in July, data published by Destatis revealed.

Production was expected to grow 0.5 percent. On a yearly basis, industrial production grew 2.3 percent, reversing July's 1.8 percent fall.

Elsewhere, U.K. house prices remained unchanged in September after falling for two straight months amid higher interest rate expectations, monthly data published by Lloyds Banking Group showed.

House prices were flat in September on a monthly basis, following a 0.3 percent fall in August and a 0.1 percent drop in July.

While the U.K.'s FTSE 100 Index is down by 0.5 percent, the French CAC 40 Index is down by 1.1 percent and the German DAX Index is down by 1.2 percent.

Pennon Group shares have plummeted. The water utility company announced a £550 million rights issue and a 30 percent cut in its dividend.

Valerio Therapeutics, a clinical-stage biotechnology company, has also slumped after reporting a wider net loss for the first half of 2026.

Mersen has also fallen. The French provider of electrical power and advanced materials has lifted its annual outlook and reaffirmed its medium-term goals for fiscal 2029.

On the other hand, Bridgepoint has soared. The alternative asset manager raised its 2026 profit guidance, lifted its medium-term carried-interest targets and overhauled its dividend policy.

British oil major Shell has also moved to the upside after raising its third-quarter integrated gas production outlook.

British American Tobacco has also rsien. The tobacco giant has entered into a new agreement with Merrill Lynch International to conduct its share repurchase program from Oct. 13.

U.S. Economic News

The Energy Information Administration is scheduled to release its report on crude oil inventories in the week ended October 2nd at 10:30 am ET.

At 1 pm ET, the Treasury Department is due to announce the results of this month's auction of $39 billion worth of ten-year notes.

The Federal Reserve is scheduled to release the minutes of its September 15-16 monetary policy meeting at 2 pm ET.

At 3 pm ET, the Fed is due to release its report on consumer credit in the month of August. Consumer credit is expected to increase by $15.0 billion.