Futures Pointing To Choppy Trading Early On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to extend the lackluster performance seen in the previous session.

Traders may continue to stick to the sidelines ahead of the Federal Reserve's highly anticipated monetary policy announcement later this afternoon.

With the Fed widely expected to lower interest rates by 25 basis points, traders will look to the accompanying statement as well as officials' latest economic projections for clues about the outlook for rates.

CME Group's FedWatch Tool is currently indicating a 94 percent chance the Fed will cut rates by a quarter point and a slim 6 percent chance of a half-point rate cut.

The Fed is widely expected to lower rates by another 25 basis points at both its October and December meetings, although Fed Chair Jerome Powell is likely to say future rate cuts will depend on incoming economic data.

However, a slump by shares of Nvidia (NVDA) may weigh on the markets, with the AI darling and market leader tumbling by 1.6 percent in pre-market trading.

Nvidia is under pressure after a report from the Financial Times said China's internet regulator has banned the country's biggest technology companies from buying the company's artificial intelligence chips.

After ending Monday's session mostly higher, stocks showed a lack of direction over the course of the trading day on Tuesday. The Nasdaq and the S&P 500 reached new record intraday highs in early trading but spent the rest of the day lingering near the unchanged line.

The major averages eventually ended the day modestly lower. The Dow dipped 125.55 points or 0.3 percent to 45,757.90, the Nasdaq slipped 14.79 points or 0.1 percent to 22,333.96 and the S&P 500 edged down 8.52 points or 0.1 percent to 6,606.76.

The choppy trading on Wall Street came as traders seemed reluctant to make significant moves as the Federal Reserve began its two-day monetary policy meeting.

Meanwhile, traders largely shrugged off a Commerce Department report showing retail sales rose by much more than expected in the month of August.

The Commerce Department said retail sales climbed by 0.6 percent in August, matching an upwardly revised increase in July.

Economists had expected retail sales to inch up by 0.2 percent compared to the 0.5 percent growth originally reported for the previous month.

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.

Gold stocks showed a significant move to the downside, however, with the NYSE Arca Gold Bugs Index slumped by 2.3 percent despite a modest increase by the price of the precious metal.

Considerable weakness also emerged among utilities stocks, as reflected by the 1.6 percent loss posted by the Dow Jones Utility Average.

On the other hand, energy stocks moved sharply higher along with the price of crude oil, driving both the NYSE Arca Oil Index and the Philadelphia Oil Service Index up by 2.2 percent.

Commodity, Currency Markets

Crude oil futures are falling $0.32 to $64.20 a barrel after surging $1.22 to $64.52 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,707.20, down $17.90 compared to the previous session's close of $3,725.10. On Tuesday, gold inched up $6.10.

On the currency front, the U.S. dollar is trading at 146.40 yen compared to the 146.68 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1837 compared to yesterday's $1.1867.

Asia

Asian stocks ended mixed on Wednesday ahead of the Federal Reserve's interest rate decision later in the day, with a 25 basis point rate cut already priced in.

China's Shanghai Composite Index rose 0.4 percent to 3,876.34 as the United States and China reached a framework agreement to switch short-video app TikTok to U.S.-controlled ownership.

U.S. President Donald Trump said he would speak to Chinese President Xi Jinping on Friday to confirm the details of the agreement.

Hong Kong's Hang Seng Index surged 1.8 percent to 26,908.39, with tech stocks rallying on optimism over artificial intelligence-fueled demand.

Japanese markets ended slightly lower as the yen held close to its highest level since July 24 amid divergent BoJ-Fed policy expectations.

A government report released earlier today showed that Japan's trade deficit widened sharply from ¥118.4 billion to ¥242.5 billion in August.

Japanese 20-year bond yields fell after an auction of that tenor drew the strongest demand since 2020.

The Bank of Japan meets on Friday to decide on interest rates but no change in policy is expected due to uncertainties over the domestic political situation and the effects of U.S. tariffs.

The Nikkei 225 Index ended 0.3 percent lower at 44,790.38, slipping from a record high reached in the previous session. The broader Topix Index fell 0.7 percent to 3,145.83.

Seoul stocks fell sharply as investors locked in profits from recent sharp gains. The Kospi tumbled 1.1 percent to 3,413.40, snapping an 11-session winning streak, led by losses in chipmakers.

Australian markets ended notably lower as falling iron ore and gold prices weighed on the mining sector. The benchmark S&P/ASX 200 Index slid 0.7 percent to 8,818.50 ahead of upcoming August employment data. The broader All Ordinaries Index closed 0.6 percent lower at 9,094.90.

Coal miner Whitehaven Coal rallied 5.2 percent and Yancoal Australia climbed 2.4 percent after BHP said it would suspend operations and cut 750 jobs at a Queensland coking coal mine it shares with a unit of Mitsubishi.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index finished marginally lower at 13,228.38, trimming early losses.

Europe

European stocks have edged higher on Wednesday ahead of the U.S. Federal Reserve's interest rate decision later in the day. With a 25 basis point rate cut expected, the focus will be on Fed Chair Jerome Powell's comments on the policy outlook.

In economic news, the latest U.K. inflation data reinforced expectations that the Bank of England will keep rates unchanged this week.

According to the Office for National Statistics, the consumer price index rose 3.8 percent on a yearly basis in August, the same rate of increase as seen in July and matching economists' expectations.

The 3.8 percent inflation was the joint-highest recorded since January 2024, when the rate was 4.0 percent.

The U.K.'s FTSE 100 Index is up by 0.3 percent and the German DAX Index is up by 0.2 percent, although the French CAC 40 Index has bucked the uptrend and edged down by 0.1 percent.

In corporate news, French catering and facility management group Sodexo has advanced after renewing a contract with Shell for five years.

German wind turbine maker Nordex has also shown a strong move to the upside after receiving its first order from Ecuador.

Dutch postal operator PostNL has also moved notably higher after announcing its "ambitious" 2028 targets.

U.S. Economic News

After reporting significant increases in new residential construction in the U.S. over the two previous months, the Commerce Department released a report on Wednesday showing housing starts pulled back by much more than expected in the month of August.

The Commerce Department said housing starts plunged by 8.5 percent to an annual rate of 1.307 million in August after surging by 3.4 percent to a revised rate of 1.429 million in July.

Economists had expected housing starts to tumble by 4.1 percent to an annual rate of 1.370 million from the 1.428 million originally reported for the previous month.

The report also said building permits dove by 3.7 percent to an annual rate of 1.312 million in August after slumping by 2.2 percent to a revised rate of 1.362 million in July.

Building permits, an indicator of future housing demand, were expected to jump by 1.2 percent to an annual rate of 1.370 million from the 1.354 million originally reported for the previous month.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on crude oil inventories in the week ended September 12th. Crude oil inventories are expected to decrease by 1.5 million barrels after climbing by 3.9 million barrels in the previous week.

The Federal Reserve is due to announce its monetary policy decision at 2 pm ET, followed by Fed Chair Jerome Powell's post-meeting press conference at 2:30 pm ET.