After trending higher in recent sessions, stocks are likely to give back ground in early trading on Wednesday. The major index futures are currently pointing to a lower open for the , with the Dow futures down by 224 points.
Concerns about the economic impact of a global trade war are likely to weigh on the markets after President Donald Trump's administration proposed new tariffs on China.
Trump has ordered U.S. Trade Representative Robert Lighthizer to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports.
The move comes after the U.S. imposed a 25 percent tariff on $34 billion worth of Chinese imports last Friday, leading China to retaliate by imposing tariffs on $34 billion worth of U.S. exports.
"For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition," Lighthizer said. "We have been very clear and detailed regarding the specific changes China should undertake."
"Unfortunately, China has not changed its behavior - behavior that puts the future of the U.S. at risk," he added. "Rather than address our legitimate concerns, China has begun to retaliate against U.S. products. There is no justification for such action."
China has vowed to take countermeasures in response to the new tariffs, which will not effect until after a two-month review process.
In U.S. economic news, the Labor Department released a report showing producer prices increased by slightly more than expected in the month of June.
The Labor Department said its producer price index for final demand rose by 0.3 percent in June after climbing by 0.5 percent in May. Economists had expected prices to edge up by 0.2 percent.
Excluding food and energy prices, core producer prices also climbed by 0.3 percent in June, matching the increase seen in May. Core prices had been expected to rise by 0.2 percent.
Compared to the same month a year ago, producer prices were up by 3.4 percent in June, representing the largest 12-month increase since a 3.7 percent jump in November of 2011.
Shortly after the start of trading, the Commerce Department is scheduled to release its report on wholesale inventories in the month of May. Wholesale inventories are expected to climb by 0.5 percent.
Following the rally seen on Monday, stocks saw some further upside during trading on Tuesday. With the upward move on the day, the S&P 500 reached its best closing level in five months.
The major averages all closed in positive territory, although the Nasdaq inched up just 3.00 points or less than a tenth of a percent to 7,759.20. The Dow climbed 143.07 points or 0.6 percent to 24,919.66 and the S&P 500 rose 9.67 points or 0.4 percent to 2,793.84.
In overseas trading, stock markets across the Asia-Pacific region saw substantial weakness during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1.2 percent, while China's Shanghai Composite Index plunged by 1.8 percent.
The major European markets have also shown significant moves to the downside on the day. The U.K.'s FTSE 100 Index, the German DAX Index and the French CAC 40 Index are all down by 1 percent.
In commodities trading, crude oil futures are sliding $0.80 to $73.31 a barrel after rising $0.26 to $74.11 a barrel on Tuesday. Meanwhile, after falling $4.20 to $1,255.40 an ounce in the previous session, gold futures are dropping $3.80 to $1,251.60 an ounce.
On the currency front, the U.S. dollar is trading at 111.21 yen compared to the 111.00 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1747 compared to yesterday's $1.1744.
by P2PNews Staff Writer