Stocks May Extend Yesterday's Pullback In Early Trading - U.S. Commentary

(RTTNews) - On the heels of the pullback seen in the previous session, stocks may see some further downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 105 points.

Lingering concerns about the impact of Britain's vote to leave the European Union may continue to weigh on the markets after contributing to the pullback seen on Tuesday.

The so-called Brexit vote has raised global growth worries, leading some traders to move their money into safe havens such as U.S. government bonds.

The strength among bonds has pushed the yields on ten-year notes and thirty-year bonds to record lows. Bond yields move opposite of their price.

The Brexit concerns have also led to a notable decline by the British pound, which has fallen to its lowest level against the U.S. dollar in over thirty years.

In U.S. economic news, the Commerce Department recently released a report showing that the U.S. trade deficit widened by more than expected in the month of May.

The report said the trade deficit widened to $41.1 billion in May from $37.4 billion in April. Economists had expected the deficit to widen to $40.0 billion.

The wider than expected trade deficit came as the value of imports surged up by 1.6 percent, while the value of exports edged down by 0.2 percent.

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

The ISM's non-manufacturing index is expected to inch up to 53.3 in June from 52.9 in May, with a reading above 50 indicating growth in the service sector.

Additionally, the Federal Reserve is due to release the minutes of its latest monetary policy meeting later in the day.

Following the long Fourth of July weekend, stocks moved mostly lower during trading on Tuesday. The pullback on the day came after the major averages closed higher for four consecutive sessions in the previous week.

The major averages climbed well off their worst levels late in the session but still closed firmly in the red. The Dow slid 108.75 points or 0.6 percent to 17,840.62, the Nasdaq decline 39.67 points or 0.8 percent to 4,822.90 and the S&P 500 fell 14.40 points or 0.7 percent to 2,088.55.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index plunged by 1.9 percent, while Hong Kong's Hang Seng Index slumped by 1.2 percent.

The major European markets have also shown notable moves to the downside on the day. While the French CAC 40 Index is down by 2.1 percent, the German DAX Index is down by 2 percent and the U.K.'s FTSE 100 Index is down by 1.6 percent.

In overseas trading, crude oil futures are sliding $0.55 to $46.05 a barrel after tumbling $2.39 to $46.60 a barrel in the previous session. Meanwhile, an ounce of gold is currently trading at $1,372.20, up $13.50 from the previous session's close of $1,358.70. On Tuesday, gold climbed $19.70. On the currency front, the U.S. dollar is trading at 100.77 yen compared to the 101.74 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1,1083 compared to yesterday's $1.1076.