Stocks are likely to move to the upside in early trading on Wednesday, adding to the strong gains posted in the previous session. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.3 percent.
The markets may continue to benefit from optimism about an interest rate cut by the Federal Reserve following yesterday's consumer price inflation data.
With the consumer price inflation data largely coming in line with economist estimates, the Fed is widely expected to lower rates by a least a quarter point next month.
U.S. Treasury Secretary Scott Bessent wants the Fed to keep the door open to a larger, 50 basis point rate cut next month following recent weak jobs data.
CME Group's FedWatch Tool is currently indicating a 99.9 percent chance the Fed will cut rates by 25 basis points in September.
President Donald Trump also continues to pressure Fed Chair Jerome Powell to lower rates and recently threatened to allow a "major lawsuit" against him over renovations at the Fed's headquarters to proceed.
However, overall trading activity may be somewhat subdued, with a lack of major U.S. economic data likely to keep some traders on the sidelines.
Reports on producer price inflation, retail sales, industrial production and consumer sentiment are likely to attract attention in the coming days.
After ending Monday's choppy trading session moderately lower, stocks showed a strong move back to the upside during trading on Tuesday. The major averages more than offset the losses posted in the previous session, with the Nasdaq and the S&P 500 reaching new record closing highs.
The major averages ended the session near their best levels of the day. The Nasdaq surged 296.50 points or 1.4 percent to 21,681.90, the S&P 500 jumped 72.31 points or 1.1 percent to 6,445.76 and the Dow shot up 483.52 points or 1.1 percent to 44,458.61.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.3 percent, while Hong Kong's Hang Seng Index surged by 2.6 percent.
The major European markets have also moved to the upside on the day. While the German DAX Index is up by 0.8 percent, the French CAC 40 Index is up by 0.5 percent and the U.K.'s FTSE 100 Index is up by 0.2 percent.
In commodities trading, crude oil futures are slipping $0.14 to $63.03 a barrel after sliding $0.79 to $63.17 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,408.50, up $9.50 compared to the previous session's close of $3,399. On Tuesday, gold edged down $5.70.
On the currency front, the U.S. dollar is trading at 147.33 yen compared to the 147.84 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1707 compared to yesterday's $1.1675.
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