Trepidation Ahead Of Fed Minutes Weighing On Wall Street - U.S. Commentary

(RTTNews) - Stocks have moved notably lower in early trading on Wednesday, extending the downward move seen over the course of the previous session. The major averages have slid firmly into negative territory, with the Dow on pace to set a new six-month closing low.

Currently, the major averages are stuck in the red, not far off their worst levels of the day. The Dow is down 160.08 points or 0.9 percent at 17,351.26, the Nasdaq is down 34.04 points or 0.7 percent at 5,025.31 and the S&P 500 is down 17.27 points or 0.8 percent at 2,079.65.

The early weakness on Wall Street partly reflects trepidation ahead of the release of the minutes of the Federal Reserve's latest monetary policy meeting this afternoon.

The minutes are likely to be closely analyzed for hints regarding whether the Fed will begin raising interest rates at its next meeting in September.

However, it is worth noting that the minutes contain a slew of information that could be used by those on either side of the interest rate debate to support their argument.

Traders are also expressing concerns about recent volatility in the Chinese stock market, as the Shanghai Composite Index ended the day up by 1.2 percent after falling more than 5 percent.

Meanwhile, the Labor Department released a report before the start of trading showing that U.S. consumer prices rose by slightly less than expected in July.

The Labor Department said its consumer price index edged up by 0.1 percent in July after climbing by 0.3 percent in June. Economists had expected prices to rise by 0.2 percent.

Excluding food and energy prices, the core consumer price index also ticked up by 0.1 percent in July following a 0.2 percent increase in June. Core prices were also expected to rise by 0.2 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The very muted 0.1% m/m gains in both headline and core CPI in July will certainly give the Fed pause for thought in whether to raise interest rates or not at the next FOMC meeting in mid-September."

"On balance, we still think the Fed will go ahead and raise rates in response to the further improvement in labor market conditions. But the decision is finely balanced," he added. "With price inflation and wage growth still muted, a case can also be made for waiting." Steel stocks have shown a significant move to the downside in early trading, dragging the NYSE Arca Steel Index down by 2 percent. The index is currently poised to end the session at its lowest closing level in over six years.

Energy, biotechnology, chemical, and brokerage stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Australia's All Ordinaries Index jumped by 1.3 percent.

Meanwhile, the major European markets have all come under pressure on the day. While the German DAX Index has slumped by 1.7 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are down by 1.1 percent and 1 percent, respectively.

In the bond market, treasuries are seeing modest weakness but have climbed well off their worst levels. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.1 basis points at 2.207 percent.