The major U.S. index futures are currently pointing to a lower open on Wednesday, with stocks likely to give back ground following recent strength.
A notable drop by shares of Target (TGT) may weigh on Wall Street, as the discount retailer is slumping by 2 percent in pre-market trading.
The pullback by Target comes after the company reported second quarter earnings that fell well short of analyst estimates, as it cut prices in an effort to reduce excess inventory.
On the other hand, shares of Lowe's (LOW) are likely to see initial strength after the home improvement retailer reported second quarter earnings that beat analyst estimates and forecast full-year earnings toward the top end of its outlook range.
Profit taking may also contribute to initial weakness on Wall Street, although recent efforts to cash in on the recent strength in the markets have largely faded over the course of the session.
Early trading may also be impacted by reaction to a Commerce Department report showing U.S. retail sales came in flat in July amid pullbacks in gas station and auto sales.
Later in the day, the Federal Reserve is scheduled to release the minutes of its latest monetary policy meeting, potentially shedding additional light on the outlook for interest rates.
While the Dow extended a recent upward trend during trading on Tuesday, closing higher for the fifth straight session, the tech-heavy Nasdaq and the S&P 500 fluctuated over the course of the trading day.
The major averages eventually ended the session mixed, with the Dow and the S&P 500 reaching their best closing levels in almost four months.
The Dow climbed 239.57 points or 0.7 percent to 34,152.01 and the S&P 500 edged up 8.06 points or 0.2 percent to 4,305.20. Meanwhile, the Nasdaq recovered from its early lows but still closed down 25.50 points or 0.2 percent at 13,102.55.
The continued advance by the Dow was partly due to strong gains by Walmart (WMT) and Home Depot (HD), with the retail giants jumping by 5.1 percent and 4.1 percent, respectively.
The rallies by Walmart and Home Depot came after both companies reported better than expected second quarter results.
The S&P 500 gave back ground after encountering resistance near its 200-day moving average but still managed to close modestly higher.
Buying interest may have been generated in reaction to a report from the Federal Reserve showing U.S. industrial production increased by more than expected in the month of July.
The Fed said industrial production climbed by 0.6 percent in July following a revised unchanged reading in June.
Economists had expected industrial production to rise by 0.3 percent compared to the 0.2 percent dip originally reported for the previous month.
Meanwhile, traders largely shrugged off a Commerce Department report showing new residential construction tumbled by much more than expected in the month of July.
The report showed housing starts plunged by 9.6 percent to an annual rate of 1.446 million in July after slumping by 2.4 percent to a rate of 1.559 million in June. Economists had expected housing starts to decline by 1.2 percent to a rate of 1.540 million.
With the much steeper than expected drop, housing starts dove to their lowest annual rate since hitting 1.430 million in February of 2021.
Building permits, an indicator of future housing demand, also fell by 1.3 percent to an annual rate of 1.674 million after inching up by 0.1 percent to a revised rate of 1.696 million in June.
Economists had expected building permits to tumble by 2.1 percent to an annual rate of 1.650 million from the 1.685 million originally reported for the previous month.
Retail stocks turned in a strong performance following the upward earnings news from Walmart and Home Depot, with the Dow Jones U.S. Retail Index surging by 2 percent to its best closing level in well over three months.
Significant strength was also visible among steel stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Steel Index.
Natural gas, banking and transportation stocks also saw strength on the day, while weakness among biotechnology and semiconductor stocks contributed to the modest pullback by the Nasdaq.
Commodity, Currency Markets
Crude oil futures are edging down $0.12 to $86.41 a barrel after plunging $2.88 to $86.53 barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,781.70, down $8 compared to the previous session's close of $1,789.70. On Tuesday, gold fell $8.40.
On the currency front, the U.S. dollar is trading at 135.18 yen compared to the 134.22 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0156 compared to yesterday's $1.0171.
Asia
Asian stocks rose broadly on Wednesday amid bets that central banks will be less aggressive with rate hikes in the coming months.
The upside was limited as investors awaited the release of minutes of the U.S. Federal Reserve's latest policy meeting later in the day for clues on future interest rate hikes.
The dollar index held steady and gold traded flat, while oil prices recovered some lost ground in Asian trading after the American Petroleum Institute report showed a larger-than-expected drop in U.S. oil and gasoline inventories.
China's Shanghai Composite Index rose 0.5 percent to 3,292.53 a day after policymakers announced a slew of stimulus measures to revive growth. There were also reports that Beijing is considering more debt guarantees to support the property sector.
Hong Kong's Hang Seng Index closed 0.5 percent higher at 19,922.45 as investors awaited earnings from internet giant Tencent Holdings.
Japanese shares led regional gains as the yen traded lower and government data showed core machinery orders rose 0.9 percent in June from the previous month.
Separate data revealed that Japan logged a trade deficit for a 12th consecutive month in July as a surge in imports overwhelmed export growth.
The Nikkei 225 Index jumped 1.2 percent to 29,222.77, while the broader Topix closed 0.8 percent higher at 1,997.42.
Automakers Honda Motor, Nissan and Toyota all climbed around 2 percent. Sony gained 2.4 percent and Uniqlo operator Fast Retailing added 2.5 percent.
Seoul stocks drifted lower on profit taking after three days of gains. The Kospi ended down 0.5 percent at 2,521.84, falling from a two-month high amid declines in the automotive sector. Hyundai Motor lost 3.8 percent and Kia Corp. shed 2 percent.
Australian markets eked out modest gains after second quarter wage growth lagged forecasts in line with what the Reserve Bank has forecast.
Corporate earnings also remained in focus, with biotech giant CSL falling 3.4 percent after posting a drop in annual profit. Energy producer Santos fell 2.1 percent despite reporting record first-half free cash flow and underlying earnings.
The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,127.70, while the broader All Ordinaries Index ended 0.3 percent higher at 7,381.10.
Europe
European stocks have fallen on Wednesday amid inflation worries after data showed British consumer price inflation jumped to 10.1 percent in July, its highest since February 1982, intensifying the squeeze on households.
Separately, preliminary data from Eurostat revealed that growth in the Eurozone slowed slightly in the second quarter.
Seasonally adjusted GDP in the common currency area rose by 0.6 percent during the period, down from 0.7 percent in the prior quarter.
While the German DAX Index has tumbled by 1.3 percent, the French CAC 40 Index is down by 0.5 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.
Energy company Uniper SE, which secured a 15-billion-euro bailout last month, has plunged after saying it had suffered a net loss of more than 12 billion euros ($12.2 billion) in the first half of the year. The company was hit hard by reduced Russian gas deliveries.
Cineworld has also plummeted to a record low after the movie theatre operator warned of low audiences due to "limited" film releases.
On the other hand, Swiss Life has moved to the upside after reporting higher half-year net profit and confirming FY24 targets.
Danish brewer Carlsberg has also moved notably higher after delivering better-than-expected first-half revenue and earnings.
Balfour Beatty shares have also jumped. The British homebuilder raised its interim dividend after reporting a sharp increase in first-half profit.
U.S. Economic Reports
With pullbacks in gasoline and auto sales offsetting strength in other areas, the Commerce Department released a report on Wednesday showing U.S. retail sales came in flat in the month of July.
The Commerce Department said retail sales were virtually unchanged in July after climbing by a downwardly revised 0.8 percent in June.
Economists had expected retail sales to inch up by 0.1 percent compared to the 1.0 percent jump originally reported for the previous month.
The report showed sales by motor vehicle and parts dealers tumbled by 1.6 percent in July after climbing by 0.5 percent in June.
Excluding the decrease in auto sales, retail sales rose by 0.4 percent in July following a downwardly revised 0.9 percent advance in June.
The increase came as a surprise to economists, who had expected ex-auto sales to edge down by 0.1 percent compared to the 1.0 percent surge originally reported for the previous month.
At 9:30 am ET, Federal Reserve Governor Michelle Bowman is scheduled to speak on Technology, Innovation and Financial Services before the VenCent Fintech Conference.
The Commerce Department is due to release its report on business inventories in the month of June at 10 am ET. Business inventories are expected to jump by 1.4 percent.
At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended August 12th.
Crude oil inventories are expected to edge down by 0.1 million barrels after climbing by 5.5 million barrels in the previous week.
The Treasury Department is due to announce the results of this month's auction of $15 billion worth of twenty-year bonds at 1 pm ET.
At 2 pm ET, the Federal Reserve is scheduled to release of its most recent monetary policy meeting in late July, when the central bank raised interest rates by another 75 basis points.
Bowman is due to speak on COVID-19 and the Role of Women in the U.S. Economy before the Arkansas Women's Commission Meeting at 2:20 pm ET.
Stocks In Focus
Shares of Krispy Kreme (DNUT) are moving sharply lower in pre-market trading after the doughnut chain reported weaker than expected second quarter results and providing disappointing guidance.
Off-price apparel and home fashions retailer TJX Companies (TJX) may also move to the downside after reporting second quarter earnings that beat estimates but weaker than expected sales. TJX also lowered its full-year forecast.
Meanwhile, shares of Agilent Technologies (A) are likely to see initial strength after the life sciences and diagnostics company reported fiscal third quarter results that exceeded expectations and raised its full-year guidance.
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