U.S. stocks are seen opening sharply lower Wednesday, continuing the downward move from the previous session, with the tech sector under particular pressure ahead of the minutes of the latest Federal Reserve meeting.
On Tuesday, the major indices all ended in the red after a late selloff, with tech stocks giving up their gains and energy shares dragged lower by the falling oil price. The broad-based S&P 500 fell 0.9%, the blue-chip Dow Jones Industrial Average fell 0.8% and tech-heavy Nasdaq Composite fell 0.6%.
Growth stocks, and the mega tech companies in particular, have come under pressure lately on fears growing inflationary pressures could prompt the Federal Reserve to rein in its easy policies earlier than expected.
Sentiment in the tech sector has also been hit by a sharp drop in cryptocurrencies, with Bitcoin falling below $40,000 for the first time in 14 weeks.
The Nasdaq Composite is almost 5% lower in May, the S&P 500 is just over 1% lower while the DJIA is still marginally higher.
The minutes of the April meeting of the Fed’s Open Market Committee will be published later Wednesday. While this get together came before the big April jobs miss and last week’s higher-than-expected CPI number, investors will still study the details for clues on the Fed’s monetary intentions.
In corporate news, the retail sector will remain in focus Wednesday after Tuesday’s blowout numbers from Walmart (NYSE:WMT), Home Depot (NYSE:HD) and Macy's (NYSE:M). Target (NYSE:TGT) continued the good news with a 23% jump in first-quarter sales, while Lowe’s (NYSE:LOW) numbers beat expectations on robust home improvement spending. L Brands (NYSE:LB), the owner of Victoria’s Secret, reports after the close.
Oil prices weakened Wednesday as investors digested the prospects of more supply entering the market following reports of progress in the talks between the United States and Iran to revive a deal limiting the Persian Gulf country’s nuclear program, which could lead to a lifting of sanctions on its crude exports.
Additionally, data from the American Petroleum Institute showed that U.S. crude inventories rose by 620,000 barrels last week. If confirmed by U.S. government data later in the session, that would be the first weekly increase in three weeks.
U.S. crude futures traded 2.1% lower at $64.12 a barrel, while the Brent contract fell 2% to $67.34.