4:08pm: Amazon leads tech sector higher
The Dow closed Thursday down 5 points at 33,947, the Nasdaq Composite improved 128 points, 1%, to 13,631 and the S&P 500 added 16 points, 0.4%, to 4,382. The small-cap Russell 2000 index fell 15 points, 0..8%, to 1,848.
The Nasdaq and S&P each managed to snap three-day losing streaks (the latter albeit barely) as investors flocked back to tech stocks. Among them was Amazon, shares of which jumped more than 4% to $130.15.
After Wednesday's selloff and Thursday's volatility, investors might be feeling caught in the middle, said Terry Sandven, chief equity strategist at US Bank Wealth Management.
“The Nasdaq is higher today but then again, it was off yesterday,” Sandven said. “Equities appear to be in pause mode. The tug of war between bull and bear market camps is balanced, which implies uncertainty and increased volatility for the foreseeable future.”
12:05pm: Stocks seesaw on rate hike worries
US stocks were mixed in noon trading as investors stepped back into tech stocks amidst concerns of more central bank rate increases.
At midday, the Dow lost 38 points to 33,914, while the S&P 500 added 5 points at 4,370 and the tech-heavy Nasdaq gained 75 points to 13,577.
“Markets are weaker because I think that they’re realizing that not just the Federal Reserve, but global central banks are not done, and are still actually fully committed to their inflation fight and will sacrifice economic growth if they need to,” Verdence Capital Advisors chief investment officer Megan Horneman said.
Notable movers included shares of Overstock.com Inc, which climbed 14% after the e-commerce discounter won the auction for Bed Bath & Beyond’s digital assets and intellectual property, including the brand’s name.
9:40am: Unemployment claims rise
The major US indexes struggled to gain momentum at the open on Thursday as Federal Reserve chair Jerome Powell’s hawkish comments weighed on investor sentiment, as did the Bank of England’s unexpected 0.5% interest rate hike across the Atlantic.
Just after the market opened, the S&P 500 was down 12 points or 0.3% at 4,354 points, the Dow Jones had lost 90 points or 0.3% at 33,862 points, and the Nasdaq was down 19 points or 0.1% at 13,483 points.
Elsewhere, initial jobless claims for last week have signalled slower job growth despite the data being clouded by possible fraudulent claims, according to Pantheon Macroeconomics chief economist Ian Shepherdson.
Claims came in at 264,000, above the Street’s expectation of 259,000 and unchanged from the prior week's upwardly revised reading.
“Three straight readings above 260,000 are not conclusive evidence of a real shift in the trend, especially given the uncertainty over potentially large numbers of fraudulent claims, and the unreliability of the seasonals,” Shepherdson said.
“That said, the increase is consistent with the rising trend in layoff announcements, measured by both the Challenger survey and WARN notices of plant closures and mass layoffs and the year-over-year rate, which is impervious to seasonal adjustment problems, is rising rapidly too.”
He pointed out that, stepping back from the noise, the bigger picture was that the change in the financing environment for businesses, especially small firms, ought to be pushing up layoffs by now.
“We expect claims to rise further over the summer, but beware of volatility in late June and July, thanks to the difficulty of seasonally adjusting the numbers during and after the annual automakers’ retooling shutdowns,” Shepherdson said. “Focus on the trend, not the weekly numbers.”
7:50am: More rate hikes looming
US stocks are expected to open lower on Thursday after Federal Reserve chairman Jerome Powell doubled down on his message that interest rates will need to rise further to get inflation back into target range.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.3% in pre-market trading, while those for the broader S&P 500 index and for the Nasdaq-100 were also 0.3% lower.
Tech shares led a third day of losses on Wednesday following Powell’s semi-annual testimony to the House of Representatives on the state of US monetary policy. The Nasdaq Composite declined 1.2% to 13,502, the S&P 500 slipped 0.5% to 4,366 and the DJIA closed 0.3% lower at 33,952. The Russell 2000 index added 1 point to 1,867.
Today, Powell appears before the Senate Banking Committee, where the message is expected to be the same.
“The Fed Chair appeared before the House Financial Services Committee and very much stuck to last week's script, which should come as a surprise to no one. Inflation is not under control and the vast majority at the Fed believe more rate hikes will be warranted was the message, although we got that from the dot plot," commented Craig Erlam, senior market analyst at OANDA.
"For once, markets are buying what the Fed is selling and have priced in a 70% chance of a hike in July. But that's where they believe it ends with the easing cycle then starting around the turn of the year so the Fed and the markets aren't entirely on the same page," Erlam added. "The data will likely determine whether markets remain in agreement on July as I imagine it will take less to convince investors that another hike isn't warranted than the Fed."
Contact the author at stephen.gunnion@proactiveinvestors.com