U.S. Stocks May See Further Downside Ahead Of Fed Minutes

(RTTNews) - The major U.S. index futures are currently pointing to a modestly lower open on Wednesday, with stocks likely to extend the tech-led weakness seen in the previous session.

A steep drop by shares of Target (TGT) may weigh on the markets, as the retailer is plummeting by 10.1 percent in pre-market trading.

The slump by Target comes after the company reported a decrease in second quarter sales and announced its Chief Operating Officer Michael Fiddelke will succeed Chief Executive Officer Brian Cornell.

Shares of Estée Lauder (EL) are also tumbling by 6.6 percent in pre-market trading after the beauty company reported a steep fiscal fourth quarter operating loss and provided disappointing fiscal 2026 guidance.

On the other hand, shares of Lowe's (LOW) are jumping by 2.6 percent in pre-market trading after the home improvement retailer reported better than expected second quarter earnings and boosted its full-year revenue guidance.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting later this afternoon.

The minutes of the July meeting, when the Fed decided to leave interest rates unchanged in a split decision, may provide clues about outlook for rates.

After ending Monday's choppy session little changed, stocks moved mostly lower over the course of the trading day on Tuesday. The tech-heavy Nasdaq posted a particularly steep loss, although the Dow ended the day roughly flat.

The Nasdaq ended the day just off its lows of the session, tumbling 314.82 points or 1.5 percent to 21,314.95. The S&P 500 also slid 37.78 points or 0.6 percent to 6,411.37.

Meanwhile, the Dow inched up 10.45 points or less than a tenth of a percent to 44,922.27 after reaching a record intraday high in early trading.

The slump by the Nasdaq came amid a weakness in the tech sector, with shares of Nvidia (NVDA) plunging by 3.5 percent.

Nvidia told CNBC it is evaluating a "variety of products" following a Reuters report that the company is developing a new AI chip for China.

On the other hand, the Dow benefitted from a surge by shares of Home Depot (HD), as the home improvement retailer shot up by 3.2 percent.

The strong gain by Home Depot came after the company maintained its full-year guidance despite reporting second quarter results that came in modestly below analyst estimates.

Traders were also looking ahead to some key economic events later in the week, including the release of the minutes of the Federal Reserve's latest monetary policy meeting on Wednesday and the Jackson Hole Economic Symposium that gets underway on Thursday.

Federal Reserve Chair Jerome Powell is scheduled to speak at the symposium on Friday, with his remarks potentially impacting the outlook for interest rates.

According to CME Group's FedWatch Tool, there is an 86.9 percent chance the Fed will lower interest rates by a quarter point at its next monetary policy meeting in September.

Reports on weekly jobless claims, existing home sales and leading economic indicators may also attract some attention in the coming days.

On the U.S. economic front, the Commerce Department released a report this morning unexpectedly showing a sharp increase by new residential construction in the U.S. in the month of July.

Gold stocks moved sharply lower amid a decrease by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 3.0 percent.

Significant weakness is also visible among software stocks, with the Dow Jones U.S. Software Index tumbling by 2.0 percent to its lowest closing level in over a month.

Semiconductor, networking and computer hardware stocks also saw considerable weakness, contributing to the steep drop by the Nasdaq.

On the other hand, commercial real estate, housing and transportation stocks turned in strong performances, helping to offset the weakness in the aforementioned sectors.

Commodity, Currency Markets

Crude oil futures are climbing $0.71 to $63.06 a barrel after tumbling $1.07 to $62.35 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,381.30, up $22.60 compared to the previous session's close of $3,358.70. On Tuesday, gold slid $19.30.

On the currency front, the U.S. dollar is trading at 147.33 yen compared to the 147.67 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1664 compared to yesterday's $1.1647.

Asia

Asian stocks ended mixed on Wednesday as investors locked in profits in tech stocks amid concerns over valuations and reports of potential U.S. government equity stakes in major chipmakers.

Investors also kept a close eye on ongoing Ukraine peace talks and looked ahead to Fed Chair Jerome Powell's Jackson Hole speech later this week for more clarity on a September rate cut.

Gold lingered near a three-week low in Asian trading as the dollar extended gains for a third day, climbing to a more than one-week high ahead of the release of minutes from the Fed's July meeting later in the day. Oil prices inched up slightly after ending lower in the previous session.

China's Shanghai Composite Index jumped 1.0 percent to 3,766.21 as the People's Bank of China kept its benchmark loan prime rate unchanged as expected despite recent weak economic data.

Hong Kong's Hang Seng Index edged up 0.2 percent to 25,165.94, reversing early losses after the Trump administration said it was targeting more imports of Chinese goods, including steel, copper and lithium, for high-priority enforcement over alleged human-rights abuses involving the Uyghurs.

Japanese markets fell sharply to extend losses for a second day running as chip-related companies succumbed to selling pressure on concerns about government intervention in the semiconductor sector.

Investors also reacted to data that showed Japan's exports sustained their steepest drop in more than four years in July. Separate data revealed that Japan's core machinery orders rose 3 percent in June from the previous month.

The Nikkei 225 Index tumbled 1.5 percent to 42,888.55, while the broader Topix Index settled 0.6 percent lower at 3,098.91. SoftBank shares plunged 7.1 percent, Advantest plummeted 5.7 percent and Tokyo Electron gave up 1.4 percent.

Seoul stocks ended lower for a third consecutive session as big-cap tech shares tracked overnight losses of U.S. tech giants. The Kospi shed 0.7 percent to close at 3,130.09. Naver, LG Energy Solution and SK Hynix lost 2-3 percent.

Australian markets ended slightly higher, erasing early losses. The benchmark S&P/ASX 200 Index rose 0.3 percent to 8,918, with rate-sensitive banks and real estate stock pacing the gainers. The broader All Ordinaries Index finished marginally higher at 9,177.40.

Miners fell as iron ore prices weakened on reports that China plans to reduce steel production. Building materials firm James Hardie plunged almost 28 percent on disappointing quarterly results.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index rallied 1.1 percent to 13,071.30 as the Reserve Bank of New Zealand delivered another interest rate cut and flagged more easing.

Europe

European stocks are turning in a mixed performance on Wednesday after closing at five-month highs in the previous session on news of a potential Ukraine-Russia summit.

In economic news, U.K. consumer price inflation accelerated in July on higher transport cost, tempering BoE rate-cut expectations.

The consumer price index posted an annual growth of 3.8 percent after rising 3.6 percent in June. Analysts had expected prices to climb 3.7 percent.

Elsewhere, German producer prices declined for the fifth straight month in July amid cheaper energy prices, Destatis reported.

The producer price index dropped 1.5 percent year-on-year in July, faster than the 1.3 percent fall in June.

While the German DAX Index is down by 0.3 percent, the French CAC 40 Index is up by 0.2 percent and the U.K.'s FTSE 100 Index is up by 0.7 percent.

Defense stocks traded lower, with Germany's Rheinmetall and Hensoldt both falling around 1 percent as optimism grew about a potential Russia-Ukraine peace deal.

Ithaca Energy shares soared 9 percent as the North Sea-focused oil and gas company raised its 2025 production forecast for the second time this year.

Building materials supplier Geberit fell 2.3 percent after reporting a marginal decline in its first-half profit.

IT service provider Computacenter declined 1 percent after naming a new finance chief.

Swiss American eye-care group Alcon slumped nearly 10 percent after cutting its 2025 net sales outlook, citing tariff pressures.

U.S. Economic News

The Energy Information Administration is scheduled to release its report on crude oil inventories in the week ended August 15th at 10:30 am ET. Crude oil inventories are expected to dip by 1.3 million barrels after rising by 3.0 million barrels in the previous week.

At 11 am ET, Federal Reserve Board Governor Christopher Waller is due to speak on "Payments" before the Wyoming Blockchain Symposium 2025.

The Treasury Department is scheduled to announce the results of this month's auction of $16 billion worth of twenty-year bonds at 1 pm ET.

At 2 pm ET, the Federal Reserve is due to release the minutes of its latest monetary policy meeting held July 29-30.

Atlanta Federal Reserve President Raphael Bostic is scheduled to discuss the economic outlook in a moderated conversation before the Fintech South 2025 event at 3 pm ET.