U.S. Stock Futures Give Back Ground Following Disappointing Retail Sales Data

Stocks appeared poised to extend yesterday’s rally earlier Wednesday morning, but the major index futures have given back ground following the release of disappointing retail sales data. The futures are currently pointing to a modestly higher open for the markets, with the Dow futures up by 19 points.

Early buying interest may still be generated in reaction to continued optimism about a new fiscal stimulus plan following a meeting of congressional leaders on Tuesday.

After the meeting, both Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer expressed optimism that an agreement can be reached “soon.”

Traders have remained optimistic that lawmakers will eventually reach an agreement even though a deal on a new relief package has remained beyond their grasp for months.

The futures pulled back well off their highs following the release of a report from the Commerce Department showing retail sales slumped by much more than expected in the month of November.

The Commerce Department said retail sales tumbled by 1.1 percent in November following a revised 0.1 percent dip in October.

Economists had expected retail sales to slip by 0.3 percent compared to the 0.3 percent increase originally reported for the previous month.

Excluding a decrease in sales by motor vehicle and parts dealers, retail sales still fell by 0.9 percent in November. Ex-auto sales were expected to inch up by 0.1 percent.

Nonetheless, trading activity may be subdued ahead of the announcement of the Federal Reserve’s latest monetary policy decision this afternoon.

The Fed is widely expected to leave interest rates unchanged, but traders are hopeful the central bank will provide further accommodation by focusing more asset purchases on the long end of the Treasury yield curve.

Shortly after the start of trading, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of December.

The housing market index is expected to dip to 88 in December after climbing to a new record high of 90 in November.

The Commerce Department is also due to release its report on business inventories in the month of October. Business inventories are expected to rise by 0.4 percent.

After closing mixed for three consecutive sessions, stocks moved sharply higher over the course of the trading day on Tuesday. With the rally on the day, the tech-heavy Nasdaq ended the session at a new record closing high.

The major averages all finished the day firmly in positive territory. The Dow jumped 337.76 points or 1.1 percent to 30,199.31, the Nasdaq surged up 155.02 points or 1.3 percent to 12,595.06 and the S&P 500 shot up 47.13 points or 1.3 percent to 3,694.62.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while Hong Kong’s Hang Seng Index jumped by 1 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has surged up by 1.4 percent, the U.K.’s FTSE 100 Index is up by 0.6 percent and the French CAC 40 Index is up by 0.2 percent.

In commodities trading, crude oil futures are edging down $0.05 to $47.57 a barrel after climbing $0.63 to $47.62 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,856.50, up $1.20 compared to the previous session’s close of $1,855.30. On Tuesday, gold jumped $23.20.

On the currency front, the U.S. dollar is trading at 103.43 yen compared to the 103.67 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.2185 compared to yesterday’s $1.2151.

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