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Futures Pointing to Initial Strength on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a higher opening on Wednesday following the lackluster performance seen in the previous session.

The upward momentum on Wall Street comes following the release of a report from the Labor Department showing consumer prices increased in line with economist estimates in the month of October.

The relatively tame inflation data may offset some recent concerns about the Federal Reserve raising interest rates faster than currently anticipated.

Trading activity may remain somewhat subdued, however, as lingering concerns about the global economic outlook may keep some traders on the sidelines.

Remarks by Fed Chairman Jerome Powell after the close of trading are also likely to attract attention, as traders look for additional clues about the outlook for interest rates.

Last week, the Fed left interest rates unchanged as widely expected but indicated it remains on track to gradually raise rates despite signs of a slowdown in the pace of growth in business investment.

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Following the sell-off seen on Monday, stocks turned in a relatively lackluster performance during trading on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line.

While the tech-heavy Nasdaq inched up 0.01 points or less than a tenth of a percent to 7,200.88, the S&P 500 dipped 4.04 points or 0.2 percent to 2,722.18 and the Dow fell 100.69 points or 0.4 percent to 25,286.49.

The choppy trading on Wall Street came as traders continued to express uncertainty about the global economic outlook and the impact of an anticipated increase in interest rates.

The initial strength on Wall Street came after a report from the Wall Street Journal said high-level U.S.-China trade talks have resumed ahead of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this month.

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Traders largely shrugged off a report from the Wall Street Journal indicating high-level U.S.-China trade talks have resumed ahead of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this month.

The Journal said Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He spoke by telephone on Friday about a deal that would ease trade tension.

Traders seemed reluctant to make more significant moves ahead of the release of closely watched reports on consumer price inflation, retail sales and industrial production in the coming days.

A notable drop by Boeing (BA) weighed on the Dow after a report from the Wall Street Journal said the aerospace giant withheld information about potential hazards associated with the automated stall-prevention system on its 737 MAX 8 and MAX 9 models.

Home improvement retail giant Home Depot (HD) also closed lower despite reporting better than expected third quarter results and raising its full-year guidance.

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Energy stocks showed a substantial move to the downside on the day amid a steep drop by the price of crude oil. Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 4.3 percent and the NYSE Arca Oil Index tumbled by 2.6 percent.

A decrease by the price of gold also weighed on gold stocks, resulting in a 1.3 percent drop by the NYSE Arca Gold Bugs Index.

On the other hand, semiconductor stocks rebounded after moving sharply lower over the past few sessions, with the Philadelphia Semiconductor Index climbing by 1.4 percent.

Graphics chip maker Nvidia (NVDA) posted a standout gain after Susquehanna upgraded its rating on the company’s stock to Positive from Neutral.

Notable strength was also visible among housing stocks, as reflected by the 1.1 percent gain posted by the Philadelphia Housing Sector Index.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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