The major U.S. index futures are currently pointing to a slightly higher open on Wall Street on Wednesday, with stocks likely to move back to the upside after ending yesterday’s choppy trading session modestly lower.
Optimism about the outlook for interest rates may lead stocks to resume their upward trend ahead of the release of the minutes of the Federal Reserve’s latest monetary policy meeting.
The Fed is due to release the minutes of its late July meeting this afternoon, and traders will be looking for the minutes to support expectations of an interest rate cut next month.
Ahead of the release of the minutes, CME Group’s FedWatch Tool suggests there is a 67.5 percent of a quarter point rate cut next month and a 32.5 percent chance of a half point rate cut.
Later in the week, remarks by Fed Chair Jerome Powell and other Fed officials at the Jackson Hole Economic Symposium are also likely to attract attention.
After trending higher for several sessions, stock showed a lack of direction over the course of the trading day on Tuesday. The major averages bounced back and forth across the unchanged line before eventually ending the day modestly lower.
The major averages finished the session well off their worst levels of the day but still in the red. The Dow dipped 61.56 points or 0.2 percent to 40,834.97, the Nasdaq fell 59.83 points or 0.3 percent to 17,816.94 and the S&P 500 slipped 11.13 points or 0.2 percent to 5,597.12.
The modestly lower close on Wall Street may partly have reflected profit taking following the recent upward trend on Wall Street, which saw the Nasdaq and the S&P 500 close higher for eight consecutive sessions.
Trading activity remained relatively subdued, however, as traders seemed reluctant to make significant moves ahead of key events later this week that could impact the outlook for interest rates.
Substantial weakness among energy stocks weighed on the markets, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index plunging by 3.4 percent and 2.8 percent, respectively.
The weakness among energy stocks came as the price of crude oil saw further downside after moving sharply lower over the two previous sessions.
Considerable weakness was also visible among steel stocks, as reflected by the 1.4 percent loss posted by the NYSE Arca Steel Index.
Semiconductor, natural gas and brokerage stocks also saw notable weakness, while networking stocks showed a strong move to the upside on the day.