Stocks May See Further Downside Amid Geopolitical Concerns

After ending the previous session modestly lower, stocks may see further downside in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 30 points.

Geopolitical concerns are likely to weigh on the markets amid a continued increase in tensions between the U.S. and North Korea.

The lower close on Tuesday came on the heels of remarks by President Donald Trump warning North Korea against making further threats.

Trump told reporters further threats from North Korea would be “met with fire, fury and frankly power the likes of which this world has never seen before.”

North Korea seemed unfazed by the president’s bluster, however, as state media carried a statement indicating the communist nation is “carefully examining” a plan to strike the U.S. Pacific territory of Guam.

The back-and-forth came on the heels of reports the U.S. intelligence community has determined North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles.

A notable decline by Disney (DIS) is likely to help drag the Dow lower, with the entertainment giant under pressure in pre-market trading.

The downward momentum for Disney comes after the company reported fiscal third quarter earnings that came in above estimates but on weaker than expected revenues.

On the U.S. economic front, the Labor Department released a report showing labor productivity increased by slightly more than expected in the second quarter.

The report said labor productivity climbed by 0.9 percent in the second quarter after inching up by a revised 0.1 percent in the first quarter. Economists had expected productivity to increase by 0.7 percent.

The Labor Department also said unit labor costs rose by 0.6 percent in the second quarter following an upwardly revised 5.4 percent spike in the first quarter.

Unit labor costs had been expected to climb by 1.2 percent compared to the 2.2 percent jump that had been reported for the previous quarter.

Shortly after the start of trading, the Commerce Department is scheduled to release its report on wholesale inventories in the month of June. Wholesale inventories are expected to climb by 0.6 percent.

Stocks fluctuated over the course of the trading session on Tuesday before eventually closing modestly lower. The drop on the day ended the Dow’s streak of setting new record closing highs for nine consecutive sessions.

The major averages ended the day posting modest losses….

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