Investing.com - U.S. stock futures pointed to strong gains at the open on Wednesday, as markets attempt to recover from sharp losses the previous session.
During early morning hours in New York, the blue-chip Dow futures rallied 199 points, or 1.26%, the S&P 500 futures jumped 26 points, or 1.37%, while the Nasdaq 100 futures rose 49 points, or 1.21%.
On Tuesday, the Dow surged more than 400 points after the open, only to turn lower and close down 204 points, the biggest reversal to the downside since October 29, 2008, as investors looked past China's latest easing move amid ongoing concerns over the deteriorating outlook for the Asian nation's economy.
The People's Bank of China cut interest rates and lowered the reserve requirement ratio for large lenders on Tuesday, in a much-anticipated move that some in the market believed was long overdue.
However, investors were left largely unimpressed amid concerns it will not be enough to stabilize the slowing economy or halt a stock market collapse.
In a sign of how unconvinced investors were of China's latest easing move, the Shanghai Composite closed down 1.3% in a highly-volatile session, reflecting investors' views that much more support was needed from the government and the central bank.
After the close of trading in Chinese markets on Wednesday, China's central bank said it will inject 140 billion yuan, or $21.8 billion, into the financial system in an effort to boost liquidity.
Recent steep declines in Chinese equity markets have sparked fears that they will hasten an economic downturn and undermined investor confidence in the government’s ability to revitalize economic growth.
The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears over the condition of the economy.
On the data front, the U.S. is to release data on durable goods orders at 8:30AM ET, as investors look for fresh readings on the strength of the economy.
The report is expected to show that orders for durable goods declined 0.5% in July, following a gain of 3.4% a month earlier, while core orders are forecast to rise 0.4% after tacking on 0.6% in June.
In Europe, Germany's DAX dropped almost 2% on Wednesday, while France’s CAC 40 and London's FTSE 100 were both down around 1.5%, as investors resumed their focus on the deteriorating outlook for China and its impact on the global economy.
Elsewhere, U.S. oil futures struggled below the $40-level as market participants looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.45% early Wednesday to 94.34.
China's slowing economy and global market turmoil have created fresh uncertainty over whether the Federal Reserve will start hiking interest rates next month.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.
Some traders believe the Fed could postpone raising interest rates until December as officials are likely to remain concerned over global growth and inflation pressures due to China’s shock currency devaluation move and weak commodity prices.