Trade, Geopolitical Concerns May Lead to Pullback on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Thursday following the rebound seen over the course of the previous session.

Lingering trade concerns may weigh on the markets following President Donald Trump?s recent comments downplaying expectations for a trade deal with China.

Potentially adding to the trade concerns, Commerce Secretary Wilbur Ross has initiated an investigation into whether imports of automobiles and parts threaten to impair U.S. national security.

?There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,? Ross said in a statement.

He added, ?The Department of Commerce will conduct a thorough, fair, and transparent investigation into whether such imports are weakening our internal economy and may impair the national security.?

Continued uncertainty about the planned meeting between Trump and North Korean leader Kim Jong Un may also generate some selling pressure.

North Korean vice foreign minister Choe Son-hui raised the possibility of canceling the historic summit following what she called ?ignorant and stupid? comments by Vice President Mike Pence.

?Whether the U.S. will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States,? Choe said, according to the state-run Korean Central News Agency.

She added, ?In case the U.S. offends against our goodwill and clings to unlawful and outrageous acts, I will put forward a suggestion to our supreme leadership for reconsidering the DPRK-U.S. summit.?

Stocks showed a notable turnaround over the course of the trading day on Wednesday after coming under pressure early in the session. The major averages climbed into positive territory following the release of the minutes of the latest Federal Reserve meeting.

The major averages ended the day just off their highs of the session. The Dow edged up 52.40 points or 0.2 percent to 24,886.81, the Nasdaq climbed 47.50 points or 0.6 percent to 7,425.96 and the S&P 500 rose 8.85 points or 0.3 percent to 2,733.29.

The upward move seen late in the session came as the minutes of the Fed’s monetary policy meeting earlier this month were seen as dovish.

The minutes showed some uncertainty about the outlook for inflation, with some questioning whether the rate of inflation will be sustained at the Fed’s 2 percent target.

Others noted a temporary period of inflation modestly above 2 percent would be consistent with the Fed’s symmetric inflation objective.

“While the economy is generally viewed as being strong by just about everyone, there remains uncertainty about inflation and therefore the path of interest rates,” said Joel L. Naroff, President and Chief Economist at Naroff Economic Advisors.

“The inflation hawks on the Fed seem to be outnumbered, at least right now, by the doves,” he added. “That does not mean there will not be a rate hike in June.”

The minutes said participants generally agreed with the assessment that continuing to raise interest rates gradually would likely be appropriate if the economy evolves about as expected.

“So, expect a hike in June,” Naroff said. “And if inflation continues to accelerate as the economy grows more strongly, additional increases this year are likely.”

On the U.S. economic front, the Commerce Department released a report showing a pullback in new home sales in the month of April.

The report said new home sales fell by 1.5 percent to an annual rate of 662,000 in April after jumping by 2 percent to a revised rate of 672,000 in March.

Economists had expected new home sales to drop to a rate of 679,000 from the 694,000 originally reported for the previous month.

The weakness seen earlier in the session partly reflected a negative reaction to earnings news from retail giant Target (TGT).

Shares of Target slumped by 5.7 percent after the company reported first quarter results that missed analyst estimates on both the top and bottom lines.

Gold stocks moved notably higher over the course of the session, driving the NYSE Arca Gold Bugs Index up by 1.5 percent. The index rebounded after ending the previous session at its lowest closing level in well over a month.

The strength among gold stocks came as the price of the precious metal turned positive in electronic trading.

Considerable strength also emerged among retail stocks, as reflected by the 1.2 percent gain posted by the Dow Jones Retail Index. With the gain, the index reached its best closing level in well over three months.

Tobacco, real estate, and utilities stocks also moved to the upside, while significant weakness remained visible among steel and telecom stocks.