U.S. Stocks May Move Back To The Upside In Early Trading

Stocks are likely to move to the upside in early trading on Wednesday, regaining ground after ending the previous session well off their worst levels but still notably lower. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.3 percent.

Traders may continue to look to pick up stocks at relatively reduced levels after an early sell-off on Tuesday dragged the major averages down to their lowest levels in three months.

Early buying interest may also be generated in reaction to a pullback by the price of crude oil, which is retreating after reaching its highest levels since June.

The pullback by the price of crude oil comes after President Donald Trump announced he has ordered the U.S. Development Finance Corporation to provide political risk insurance and guarantees for the security of maritime trade in the Middle East.

Trump also said the U.S. Navy would begin escorting tankers through the Strait of Hormuz if necessary, promising the “free flow of energy to the world.”

The president’s plan has helped offset concerns about energy supply disruptions as a result of the ongoing conflict that erupted following U.S. and Israeli attacks against Iran.

The futures remained positive following the release of a report from payroll processor ADP showing private sector employment in the U.S. increased by more than expected in the month of February.

ADP said private sector employment climbed by 63,000 jobs in February after rising by a downwardly revised 11,000 jobs in January.

Economists had expected private sector employment to grow by 48,000 jobs compared to the addition of 22,000 jobs originally reported for the previous month.

Not long after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of February.

The ISM’s services PMI is expected to edge down to 53.6 in February from 53.8 in January, but a reading above 50 would still indicate growth.

After another sell-off at the start of trading on Tuesday, stocks once again staged a recovery attempt but did have as much success as Monday and still ended the day notably lower.

While the major averages climbed well off their worst levels of the day, they remained firmly in negative territory.

The Dow ended the day down 403.51 points or 0.8 percent at 48,502.27 after plummeting by more than 1,200 points to its lowest intraday level in almost three months.

The Nasdaq slumped 232.17 points or 1.0 percent to 22,516.69 and the S&P 500 slid 64.99 points or 0.9 percent to 6,816.63. The indexes had plunged by as much as 2.7 percent and 2.5 percent, respectively, hitting three-month lows.

In overseas trading, stock markets across the Asia-Pacific region continued to move sharply lower on Wednesday. Japan’s Nikkei 225 Index tumbled by 3.6 percent, while South Korea’s Kospi saw a 12.1 percent nosedive.

Meanwhile, the major European markets have moved back to the upside on the day. While the German DAX Index is up by 1.7 percent, the French CAC 40 Index is up by 1.2 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.

In commodities trading, crude oil futures are falling $0.58 to $73.98 a barrel after soaring $3.33 to $74.56 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $5,205.10, up $81.40 compared to the previous session’s close of $5,123.70. On Tuesday, gold plunged $187.90.

On the currency front, the U.S. dollar is trading at 157.15 yen compared to the 157.71 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1642 compared to yesterday’s $1.1613.