Stocks, after initially showing signs of early weakness, managed to stabilize by the end of the last session, closing almost unchanged. However, as we head into Wednesday's trading, indications suggest a potential downturn, with major index futures, notably the S&P 500, pointing towards a 0.2 percent decline at the opening bell.
This anticipated decline on Wall Street is closely tied to the ongoing upward trend in treasury yields, which have surged significantly over recent sessions. The ten-year yield has climbed to its highest point in nearly three months, fueled by apprehensions that the Federal Reserve may moderate its pace of interest rate reductions more slowly than anticipated.
Previously in the last month, the Federal Reserve cut interest rates by 50 basis points. Currently, data from CME Group's FedWatch Tool suggests a 91.0 percent probability of a reduced 25 basis point rate cut in the upcoming month.
Among individual stocks, McDonald's (MCD) is poised for sharp losses, expected to drag on the Dow, with pre-market trading indicating a 6.8 percent drop. This downturn follows a report from the Centers for Disease Control linking a significant E. coli outbreak in the Mountain West states to McDonald's Quarter Pounders.
Similarly, Starbucks (SBUX) is also displaying notable pre-market fragility, following a modest dip in its fiscal fourth-quarter sales and its decision to withdraw its guidance for fiscal year 2025.
In contrast, AT&T (T) shares may exhibit some initial gains, as the telecommunications giant has posted better-than-expected earnings for the third quarter.
Shortly after trading commences, the National Association of Realtors is expected to release data on September's existing home sales, predicting an increase to an annualized rate of 3.90 million, up from 3.86 million in August.
Furthermore, the Federal Reserve's Beige Book, offering a collection of anecdotal economic insights from each of the twelve Fed regions, is slated for release later today.
Tuesday's session saw stocks recover from early pressure, with major averages rebounding from their lowest points, ultimately seeing little change by day’s end. In summary, the Nasdaq added 33.12 points or 0.2 percent to 18,573.13, the Dow retracted by 6.71 points or less than a tenth of a percent to 42,924.89, and the S&P 500 decreased by 2.78 points or 0.1 percent to 5,851.20.
In international markets, Asia-Pacific stock exchanges presented mixed outcomes on Wednesday. Japan's Nikkei 225 Index fell by 0.8 percent, while Hong Kong’s Hang Seng Index rose by 1.3 percent. European markets also edged lower, with the French CAC 40 down 0.6 percent, the U.K.’s FTSE 100 slipping by 0.5 percent, and Germany's DAX decreasing by 0.2 percent.
In the commodities markets, crude oil futures experienced a decline of $1.20, settling at $70.54 per barrel, after a previous rise of $1.70 to $71.74. Meanwhile, an ounce of gold is trading slightly lower at $2,757.90, down $1.90 from its previous close of $2,759.80, following a prior rise of $20.90.
On the currency markets, the U.S. dollar has strengthened to 153.09 yen, up from 151.08 yen at the close of Tuesday’s New York trading session. Against the euro, it stands at $1.0768, a decrease from the prior day’s $1.0799.
