Stocks are anticipated to face pressure in early trading on Wednesday, potentially reversing some of the gains made in previous sessions. Major index futures indicate a notably lower opening for the markets, with S&P 500 futures currently down by 0.9%.
Tech stocks are poised to lead the early decline on Wall Street following a Bloomberg report that the Biden administration is contemplating stricter trade regulations against companies in its chip crackdown on China. According to the report, the administration has communicated to allies that it might employ the most stringent trade restrictions if companies continue to provide China with access to advanced semiconductor technology.
Bloomberg, citing individuals familiar with the discussions, mentioned that the U.S. is considering implementing the foreign direct product rule. This measure allows the U.S. to impose controls on foreign-made products that incorporate even a minimal amount of American technology.
Wall Street's downward trend also follows comments from former President Donald Trump, who suggested that Taiwan should financially compensate the U.S. for defense services, claiming that Taiwan has "taken about 100%" of America's chip business.
In U.S. economic news, the Commerce Department released a report showing a significant rebound in new residential construction for June. Housing starts rose by 3.0% to an annual rate of 1.353 million in June, following a 4.6% decline to a revised rate of 1.314 million in May. Economists had anticipated a 2.6% increase to a rate of 1.310 million from the originally reported 1.277 million for May.
The Commerce Department also reported that building permits surged by 3.4% to an annual rate of 1.446 million in June, after falling by 2.8% to a revised rate of 1.399 million in May. Building permits, a forecast of future housing demand, were expected to rise by 0.3% to an annual rate of 1.390 million from the originally reported 1.386 million for the previous month.
Shortly before trading commences, the Federal Reserve is slated to release its report on industrial production for June. Industrial production is anticipated to increase by 0.3% in June, following a 0.9% jump in May.
On Tuesday, extending the upward trend from the two preceding sessions, stocks mostly climbed during trading. The Dow led the way, achieving a new record closing high. The Dow surged 742.76 points or 1.9% to 40,954.48, the S&P 500 rose 35.98 points or 0.6% to a new record closing high of 5,667.20, and the Nasdaq added 36.77 points or 0.2% to 18,509.34.
In overseas trading, Asian-Pacific stock markets delivered mixed results on Wednesday. Japan's Nikkei 225 Index declined by 0.4%, while Hong Kong's Hang Seng Index edged up by 0.1%.
Meanwhile, European stocks have mostly declined today. The French CAC 40 Index and the German DAX Index have both decreased by 0.5%, although the U.K.'s FTSE 100 Index has slightly bucked the trend, inching up by 0.1%.
In commodities trading, crude oil futures are rising by $0.66 to $81.42 a barrel, after falling by $1.15 to $80.76 a barrel on Tuesday. An ounce of gold is trading at $2,479.30, up $11.50 from the previous session's close of $2,467.80. On Tuesday, gold surged by $38.90.
On the currency front, the U.S. dollar is trading at 156.64 yen, down from 158.35 yen at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0939, up from $1.0899 yesterday.
