U.S. Stocks May See Further Downside In Early Trading
Following the late-day weakness seen in each of the two previous sessions, stocks may see further downside in early trading on Thursday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 161 points.
Renewed concerns about the outlook for monetary policy may weigh on the markets after comments from Federal Reserve Chair Jerome Powell.
In an interview on National Public Radio’s “Morning Edition,” Powell noted accelerated coronavirus vaccine distribution combined with support from Congress will enable the U.S. to reopen the economy sooner than might have been expected.
Powell also said the Fed plans to gradually roll back its asset purchases as the economy makes substantial progress towards the Fed’s goals of maximum employment and price stability.
While Powell stressed the pullback in support will only come when the “economy has all but fully recovered,” the comments still seem to have spooked investors.
Potentially adding to the concerns about monetary policy, the Labor Department released a report showing initial jobless claims fell to their lowest level since the early days of the pandemic.
The report said initial jobless claims slid to 684,000 in the week ended March 20th, a decrease of 97,000 from the previous week’s revised level of 781,000.
Economists had expected jobless claims to decline to 730,000 from the 770,000 originally reported for the previous week.
With the much bigger than expected decrease, jobless claims dropped to their lowest level since hitting 282,000 in the week ended March 14, 2020.
A separate report from the Commerce Department showed economic activity in the U.S. unexpectedly grew faster than previously estimated in the fourth quarter of 2020.
The report showed real gross domestic product surged up by 4.3 percent in the fourth quarter compared to the previously reported 4.1 percent jump. Economists had expected the pace of GDP growth to be unrevised.
After coming under pressure late in Tuesday’s session, stocks saw further downside over the course of the trading day on Wednesday. Technology stocks helped lead the way lower, resulting in a steep drop by the tech-heavy Nasdaq.
The major averages all closed in negative territory, although the Dow edged down just 3.09 points or less than a tenth of a percent to 32,420.06. The Nasdaq plunged 265.81 points or 2 percent to 12,961.89 and the S&P 500 slid 21.38 points or 0.6 percent to 3,889.14.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while China’s Shanghai Composite Index slipped by 0.1 percent.
Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has slumped by 0.9 percent, the German DAX Index and the U.K.’s FTSE 100 Index are down by 1.1 percent and 1.2 percent, respectively.
In commodities trading, crude oil futures are tumbling $2.21 to $58.97 a barrel after soaring $3.42 to $61.18 a barrel on Wednesday. Meanwhile, after climbing $8.10 to $1,733.20 an ounce in the previous session, gold futures are sliding $8.90 to $1,724.30 an ounce.
On the currency front, the U.S. dollar is trading at 109.12 yen versus the 108.73 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1798 compared to yesterday’s $1.1813.
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