Wall Street is expected to open muted on Wednesday following Tuesday's steep losses. The FOMC minutes and earnings reports from retailers could provide direction to the market, with analysts expecting a 5-10% pullback. Bond yields are coming off their recent highs, and oil prices remain muted. The data dependency of the Federal Reserve could keep traders on tenterhooks as sentiment ebbs and flows with each data.
On Tuesday, a strong July sales report stirred concerns about another rate hike at the Federal Reserve's September rate-setting meeting. The major indices opened lower and fell further in early trading, but later took a leg down in late trading to close notably lower. Manufacturing activity in the New York region contracted by much more than expected in August, although the outlook index exuded optimism. An index measuring sentiment among homebuilders in August fell to neutral territory.
The sell-off was broad-based, with energy, financial, utility, and material stocks seeing particular weakness. The market rally seen in the first half of the year has clearly stalled, but an analyst isn't too worried by the development.
Upcoming economic data include the Mortgage Bankers Association's weekly mortgage application volume data, the Commerce Department's housing starts report, the Federal Reserve's industrial production report, and the Energy Information Administration's weekly petroleum status report.
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