(RTTNews) - Stocks are likely to move to the upside in early trading on Wednesday, regaining ground following the pullback seen over the two previous sessions. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.6 percent.
Early buying interest is likely to be generated in reaction to news that President Donald Trump has extended the U.S. ceasefire with Iran.
Calling Iran's government "seriously fractured," Trump said in a post on Truth Social that the U.S. would hold off on attacking Iran until their leaders "come up with a unified proposal."
However, Trump also said that he has directed the U.S. military to continue its blockade of all maritime traffic entering and exiting Iranian ports.
Iran dismissed Trump's ceasefire extension as "meaningless" and said the Strait of Hormuz will remain closed until the U.S. blockade is lifted.
Mahdi Mohammadi, a senior adviser to Iranian Parliament Speaker Mohammad Bagher Ghalibaf, termed the ceasefire extension a ploy "to buy time for a surprise strike," adding the "losing side cannot dictate terms."
Shortly after Trump's ceasefire announcement, Iran's Revolutionary Guard Navy claimed it has seized two container ships in Strait of Hormuz for "maritime violations."
The back and forth between Trump and Tehran has led to some uncertainty, although traders generally remain hopeful about an eventual resolution of the conflict.
Traders also continue to express optimism about the strength of corporate results, with earnings season off to a solid start.
"Investors appear to be focusing more on the direction of risk — whether things are improving or deteriorating — rather than the absolute level of geopolitical tension," said Daniela Hathorn, Senior Market Analyst at Capital.com.
"Earnings season is playing a key role in reinforcing this narrative," she added. "Expectations for continued double-digit earnings growth remain intact, helping to justify elevated equity valuations even as macro risks persist."
Following the modest pullback seen during Monday's session, stocks saw further downside over the course of the trading day on Tuesday. The major averages initially moved higher but slid firmly into negative territory as the day progressed.
The major averages ended the day just off their lows of the session. The Dow slid 293.18 points or 0.6 percent to 49,149.38, the Nasdaq declined 144.43 points or 0.6 percent to 24,529.96 and the S&P 500 fell 45.13 points or 0.6 percent to 7,064.01.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng Index slumped by 1.2 percent.
The major European markets are also mixed on the day. While the French CAC 40 Index is down by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 0.1 percent.
In commodities trading, crude oil futures are rising $0.35 to $90.02 a barrel after surging $2.25 to $89.67 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,774.60, up $55 compared to the previous session's close of $4,719.60. On Tuesday, gold slumped $109.20.
On the currency front, the U.S. dollar is trading at 159.28 yen compared to the 159.37 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1725 compared to yesterday's $1.1742.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
