Overseas Weakness May Weigh on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Wednesday following the modest weakness seen in the previous session.
Weakness in the overseas markets may weigh on Wall Street amid lingering uncertainty about Republicans’ ability to pass tax reform legislation.
After an initial move to the downside, stocks regained some ground over the course of the trading session on Tuesday but remained in the red. The major averages offset the modest gains posted in the previous session.
The major averages ended the day in negative territory but well off their lows of the session. The Dow edged down 30.23 points or 0.1 percent to 23,409.47, the Nasdaq fell 19.72 points or 0.3 percent to 6,737.87 and the S&P 500 dipped 5.97 points or 0.2 percent to 2,578.87.
Lingering uncertainty about the outlook for the Republican tax reform proposal weighed on the markets as the House prepares to vote on their bill later this week.
The House bill has significant differences from the Senate version, raising concerns about whether GOP lawmakers will be able to work together to combine the legislation.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, delayed the release of his modified version of the Senate tax reform bill.
On the U.S. economic front, the Labor Department released a report showing producer prices increased by more than anticipated in the month of October.
The Labor Department said its producer price index for final demand climbed by 0.4 percent in October, matching the increase seen in September. Economists had expected prices to inch up by 0.1 percent.
Excluding food and energy prices, core producer prices also rose by 0.4 percent in October after a matching increase in the previous month. Core prices had been expected to rise by 0.2 percent.
Energy stocks showed a significant move to the downside on the day amid a steep drop by the price of crude oil. Crude for December delivery tumbled $1.06 to $55.70 a barrel.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 3.8 percent and the NYSE Arca Natural gas Index slumped by 2.6 percent.
Substantial weakness was also visible among steel stocks, as reflected by the 2.9 percent loss posted by the NYSE Arca Steel Index. With the drop, the index fell to its lowest closing level in well over two months.
Biotechnology and chemical stocks also saw notable weakness, while considerable strength was visible among utilities stocks.