News Column

Stocks May Give Back Ground Following Recent Strength - US Commentary

August 20, 2014

WASHINGTON (Alliance News) - After moving sharply higher over the past several sessions, stocks may give back some ground in early trading on Wednesday. The major index futures are currently pointing to a modestly lower open for the markets, with the Dow futures down by 21 points.

Profit taking may contribute to any early weakness on Wall Street following the recent upward move, which lifted the tech-heavy Nasdaq to its best levels in over fourteen years.

Uncertainty about the outlook for monetary policy as well as ongoing conflicts overseas may also inspire traders to cash in on the recent gains.

Additionally, news from Target (TGT) may generate some negative sentiment, as the troubled retailer reported weaker than expected second quarter earnings and cut its full-year profit guidance.

Target's lower full-year earnings outlook came as the company continues to deal with the effects of last year's massive data breach as well as a money-losing expansion into Canada.

Home improvement retailer Lowe's (LOW) is also likely to come under pressure after the company reported second quarter results that beat estimates but lowered its forecast for full-year sales growth.

Rival Home Depot (HD) moved sharply higher on Tuesday after reporting better than expected second quarter results and raising its full-year earnings guidance.

Nonetheless, trading activity may be somewhat subdued ahead of the release of the minutes of the Federal Reserve's latest monetary policy meeting this afternoon.

Traders are likely to closely analyze the minutes for clues as to how soon the Fed will begin to consider raising interest rates.

Stocks turned in another strong performance during trading on Tuesday, extending the upward trend seen over the past several sessions. The markets benefited from a positive reaction to the latest US economic data as well as easing geopolitical concerns.

The major averages moved roughly sideways going into the close, hovering firmly in positive territory. The Dow climbed 80.85 points or 0.5% to 16,919.59, the Nasdaq rose 19.20 points or 0.4% to 4,527.51 and the S&P 500 advanced 9.86 points or 0.5% to 1,981.60.

In overseas trading, most stock markets across the Asia-Pacific region moved modestly higher during trading on Wednesday. Japan'sNikkei 225 Index closed just above the unchanged line, while Hong Kong'sHang Seng Index edged up by 0.2%.

Meanwhile, the major European markets are giving back some ground following recent strength. While the UK'sFTSE 100 Index has fallen by 0.5%, the French CAC 40 Index and the German DAX Index are down by 0.7% and 0.8%, respectively.

In commodities trading, crude oil futures are climbing USD0.77 to USD95.25 a barrel after tumbling USD1.93 to USD94.48 a barrel on Tuesday. Meanwhile, an ounce of gold is currently trading at USD1,297.30, up USD0.60 from the previous session's close of USD1,296.70. On Tuesday, gold fell USD2.60.

On the currency front, the US dollar is trading at 103.21 yen compared to the 102.92 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at USD1.3290 compared to yesterday's USD1.3320.

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Source: Alliance News

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