U.S. Stocks May Give Back Ground In Early Trading

(RTTNews) - After inching higher over the past few 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 S&P 500 futures down by 0.2 percent.

Uncertainty about the situation in the Middle East may weigh on Wall Street, as negotiations between the U.S and Iran continue to drag on.

U.S. Central Command said U.S. forces successfully defeated multiple Iranian ballistic missiles and drones and conducted "self-defense" strikes on Qeshm Island in response to attempted attacks by Iran on Tuesday.

The ongoing military exchanges have contributed to a sharp increase by the price of crude oil, with U.S. crude oil futures surging by nearly 3 percent.

However, stocks have recently been able to shrug off concerns about the war amid persistent optimism about strong earnings and resilient economic growth.

"For now, risk appetite remains supported, but with stretched valuations and shifting monetary policy expectations, markets appear increasingly sensitive to any signs that the earnings and growth story may begin to soften," said Daniela Hathorn, Senior Market Analyst at Capital.com.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of May.

The ISM's services PMI is expected to inch up to 53.7 in May from 53.6 in April, with a reading above 50 indicating growth.

Wall Street was able to shake off early weakness and find modest gains on Tuesday, with each of the three major averages hitting record closing highs for the third day in a row.

The Dow added 228.91 points or 0.5 percent to finish at 51,307.79, while the Nasdaq inched up 7.09 points or less than a tenth of a percent to close at 27,093.90 and the S&P 500 added 9.82 points or 0.1 percent to end at 7,609.82.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index surged by 2.5 percent, while Hong Kong's Hang Seng Index slumped by 1.6 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index is down by 0.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 0.3 percent.

In commodities trading, crude oil futures are surging $2.61 to $96.37 a barrel after jumping $1.60 to $93.76 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,478.20, down $41.70 compared to the previous session's close of $4,519.90. On Tuesday, gold rose $13.60.

On the currency front, the U.S. dollar is trading at 159.90 yen compared to the 159.89 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1601 compared to yesterday's $1.1631.