U.S. Stocks May Regain Ground Following Recent Sell-Off

(RTTNews) - Stocks are likely to move to the upside in early trading on Wednesday, regaining ground after moving significantly lower over the past few sessions. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.2 percent.

Bargain hunting may contribute to initial strength on Wall Street, as some traders look to pick up stocks at relatively reduced levels following the recent weakness.

The major averages slumped to their lowest closing levels in a month on Tuesday amid lingering concerns about a potential AI bubble.

Early buying interest may be somewhat subdued, however, as traders look ahead to the release of earnings news from market leader and AI darling after the close of today's trading.

"Nvidia reports tonight and the slightest bit of news to disappoint investors has the potential to whip up a tornado across global markets," said Russ Mould, investment director at AJ Bell. "Investors will be hanging on [CEO] Jensen Huang's every word and looking for clues that big investment in AI is worth it."

"Huang is an eternal optimist and Nvidia has a habit of smashing earnings expectations," he added. "Therefore, investors might be digging deeper than usual into the numbers to spot any signs of weakness, rather than simply being swayed by the headline narrative."

Traders may also be reluctant to make significant moves ahead of the release of the minutes of the Federal Reserve's latest monetary policy meeting this afternoon.

The Fed minutes may shed additional light on the outlook for interest rates amid a recent decline in expectations for another quarter point rate cut at the central bank's next meeting in December.

CME Group's FedWatch Tool currently indicates the changes the Fed lowers rates by 25 basis points next month are roughly 50-50.

In U.S. economic news, a report released by the Commerce Department showed the U.S. trade deficit narrowed significantly in the month of August amid a steep drop in the value of imports.

The Commerce Department said the trade deficit shrank to $59.6 billion in August from a revised $78.2 billion in July.

Economists had expected the trade deficit to decrease to $61.0 billion from the $78.3 billion originally reported for the previous month.

The narrower trade deficit came as the value of imports plunged by 5.1 percent to $340.4 billion, while the value of exports crept up by 0.1 percent to $280.8 billion.

Stocks regained some ground after an early sell-off but still ended Tuesday's trading significantly lower. The major averages added to the notable losses posted during Monday's session, once again falling to their lowest closing levels in a month.

The major averages all finished the day firmly in negative territory. The Dow slumped 498.50 points or 1.1 percent to 46,091.74, the Nasdaq tumbled 275.23 points or 1.2 percent to 22,432.85 and the S&P 500 slid 55.09 points or 0.8 percent to 6,617.32.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index dipped by 0.3 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index is up by 0.2 percent, the French CAC 40 Index is down by 0.1 percent and the U.K.'s FTSE 100 Index is down by 0.2 percent.

In commodities trading, crude oil futures are plunging $1.74 to $59 a barrel after jumping $0.83 to $60.74 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,107.40, up $40.90 compared to the previous session's close of $4,066.50. On Tuesday, gold slipped $8.

On the currency front, the U.S. dollar is trading at 156.19 yen compared to the 155.50 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1576 compared to yesterday's $1.1579.