Bargain Hunting May Lead to Initial Strength on Wall Street

By Investors Hub

Major US index futures are pointing to a higher opening on Wednesday, with stocks poised to extend the upward move seen in the previous session.

Traders may be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement this afternoon.

The Fed is widely expected to raise rates by a quarter point, although traders will pay close attention to the accompanying statement for clues about the outlook for rates.

Stocks moved to the upside early in the session and remained firmly positive throughout the trading day on Tuesday. With the upward move, the Dow and the S&P 500 both climbed to new record closing highs.

The Dow climbed 92.80 points or 0.4 percent to 21,328.47, the Nasdaq advanced 44.90 points or 0.7 percent to 6,220.37 and the S&P 500 rose 10.96 points or 0.5 percent to 2,440.35.

The strength on Wall Street was partly due to bargain hunting, with traders picking up stocks at relatively reduced levels.

Nonetheless, trading activity was subdued ahead of tomorrow’s Federal Reserve announcement on monetary policy.

While the Fed is widely expected to raise interest rates by a quarter point, traders will be paying close attention to the accompanying statement for clues about the outlook for rates.

On the U.S. economic front, the Labor Department released a report showing that producer prices were flat in the month of May.

The Labor Department said its producer price index for final demand was unchanged in May after climbing by 0.5 percent in April. Economists had expected the index to inch up by 0.1 percent.

Excluding food and energy prices, core producer prices rose by 0.3 percent in May following a 0.4 percent increase In April. Core prices were expected to rise by 0.2 percent.

Computer hardware stocks showed a strong move to the upside, driving the NYSE Arca Computer Hardware Index up by 1.8 percent. Western Digital (WDC) and Logitech (LOGI) posted standout gains.

Notable strength is also visible among energy and housing stocks, while most of the other major sectors showed more modest moves.